The fervor typically associated with Akshaya Tritiya, one of India’s most auspicious gold-buying festivals, was notably subdued this year as soaring prices dampened retail demand, leaving dealers grappling with the challenge of enticing buyers with steep discounts.
Traditionally a time when Indians flock to purchase gold, this year’s Akshaya Tritiya witnessed a significant downturn in physical gold buying, with many consumers opting for token purchases of small denomination coins over traditional jewelry pieces.
A Mumbai-based jeweler expressed disappointment at the stark decline in sales compared to previous years, noting that this year’s festival sales amounted to only about two-thirds of the figures seen last year. The deterrent? Near-record high prices, with domestic rates hovering around 72,700 rupees per 10 grams, not far from the record high of 73,958 rupees reached just last month.
Prithviraj Kothari, president of the India Bullion and Jewellers Association, highlighted the impact of rising prices on retail buyers, stating that the recent price hikes have severely affected their purchasing power. As a result, Indian dealers were compelled to offer discounts of up to $7 an ounce over official domestic prices, a significant jump from the $1 premium seen in previous weeks.
The situation was mirrored in China, the world’s top gold consumer, where dealers charged premiums ranging from $26 to $35 per ounce over benchmark spot prices, up from $18 to $20 in the preceding week. Similarly, demand in Hong Kong and Singapore remained subdued, with gold sold at par with benchmark prices or at modest premiums of up to $2.50.
Despite the muted demand, there remains optimism among traders, with Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong, suggesting that demand could rebound if prices experience a dip to more favorable levels.
In Japan, where demand for gold was relatively stable, dealers sold the precious metal at modest premiums ranging from $0.5 to $1. Traders noted a slight uptick in demand following the Golden Week holiday.
As the global gold market grapples with fluctuating prices and subdued demand in key consuming regions, industry players are closely monitoring market dynamics, hoping for a turnaround in sentiment that could reignite consumer interest in the yellow metal.