Jewellers expect good sales on 'Akhshaya Tritiya'

Investment experts are advising caution but with the price fall and easing of curbs, there's been a surge in gold imports last month and this, with the trend expected to stay this way for a while

Jewellers across the country are hoping for a good sales day on Tuesday, the annual Akshaya Tritiya, considered highly auspicious among Hindus for buying gold.

High imports in March and a similar trend in April so far indicate jewellers have turned bullish on gold demand. The reason for their hope this Tritiya is said to be the lower price of gold and removal of import controls on it, with the resulting improvement in sentiment. Gold’s price here is 9.9 per cent less than a year before. Last year, demand was relatively depressed at a price of nearly Rs 30,000 per 10g and stiff import controls.

Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation said (he’s based in Kolkata): “We expect a 15-20 per cent jump in gold demand compared to last year’s Akshaya Tritiya. Demand is much better is south India.” He also quoted experts tracking nakshatra (stars as in Hindu astrological belief) movements to say Tuesday would be an especially good occasion to buy gold.

  In 2013, around this occasion, gold import and demand were so robust that it became a ground for the government to curb imports. The trend suggests whenever the price is lower, demand goes up. This season, a similar high demand is expected. Last month’s gold import was 121 tonnes, compared to 48.5 tonnes in March 2014. This month might see 90 tonnes of import.

Jewellers are considered to be importing more due to Akhshaya Tritiya and marriage season demand.

Somasundaram P R, managing Director (India), World Gold Council, said: “Buying behaviour is returning to normalcy, following a reduction of the import curbs and with the expectation of a duty cut in the (Union) Budget not being met. Gold is, therefore, set to start shining more brightly this Akshaya Tritiya. Notwithstanding unseasonal rains impacting the rural economy this season, gold demand is expected to be strong in 2015, on the back of a resilient economy, surging ahead with higher growth.”

Brokers and analysts are advising people to remain cautious on gold investment, looking at the price outlook; however, jewellers are optimistic. Angel Commodities advises investors in its special report for this Tritiya, “to buy gold in a staggered manner rather than concentrate all your purchases at one go. One should take the benefit of value cost averaging to invest in gold”.

Yet, March gold import data suggests “import of higher purities, 100g bars, largely destined for manufacture of investment coins and bars, are rising. Interestingly, we have noticed that the majority of these are directed to Andhra Pradesh and Telangana, followed by Gujarat and Karnataka,” said Sudheesh Nambiath, senior analyst, precious metals, GFMS Thomson Reuters.

He says the southern market is looking more attractive for sales this Tritiya.

A leading Mumbai jeweller said the new provision in the Budget on quoting one’s PAN (income tax card) number for any purchase of over Rs 1 lakh in cash could impact jewellery demand this time. However, as mentioned earlier, import data on inflow of high-purity gold for making coins and bars for investment purchases suggest otherwise. The lower gold price suggests a 40-50g bar purchase can still be made around Rs 1 lakh by paying cash, which should not hurt demand, said a market veteran. High-purity gold’s import is estimated at 25 tonnes, almost a fourth of the inflow in March for the domestic market.