According to Reuters, gold buying demand during India's important gold shopping festival remained quite sluggish on Sunday, as gold prices rose to a record level, causing jewelry purchasing power to decline, thereby overshadowing a slight increase in investment demand.
Indian people celebrate Akshaya Tritiya - the second largest gold buying festival after Dhanteras - a time when buying precious metals is considered to bring good luck.
The overwhelming price increase has curbed jewelry demand. In terms of output, purchases decreased because consumers are more cautious; however, in terms of value, spending is higher because gold prices are high" - Mr. Amit Modak - CEO of PN Gadgil & Sons, a jewelry company based in Pune, said.
Gold futures contracts in India - the world's second largest gold consumer - closed last Friday at 154,609 rupees (1,670 USD) per 10 grams, nearly 63% higher than the Akshaya Tritiya holiday last year.
Except for a few states in southern India, demand in most other regions across the country is lower than normal.
A jeweler in Mumbai said that retailers are gradually shifting to buying gold coins - a more liquid asset - in the context that jewelry businesses are also offering discounts on jewelry crafting fees to attract customers.
A gold bar trader in Mumbai, working for a private bank, said that the trend of buying gold in India is changing. Accordingly, people no longer focus on buying during holidays, but those who are sensitive to prices are spreading their buying throughout the year, at times when prices fall.
India on Friday issued a decree announcing the list of banks allowed to import gold and silver, thereby creating a relief for banks that were forced to temporarily suspend imports due to the slow announcement of this list.
