Indian jewelers are banking on what’s considered one of the most auspicious days for gold buying to spur demand in the world’s biggest bullion consumer.
Sales on Tuesday’s Akshaya Tritiya, viewed by the country’s more than 900 million Hindus as a traditional day to buy precious metals, may increase as much as 20 percent from 2014, Manish Jain, chairman of the All India Gems & Jewellery Trade Federation, said by phone from Mumbai on Monday. The nation’s gold consumption slid 14 percent last year.
A resurgence in India’s appetite for bullion may help halt a decline in gold prices for a third straight quarter that was prompted by a withdrawal of investors from gold-backed exchange- traded funds. Demand is getting a further boost after the government ended most controls on imports that helped contain a record current-account deficit and decline in the currency.
“A positive mood exists among the retail sector as Akshaya Tritiya is considered the most auspicious time of the year for purchase of gold,” Jain said. “Gold continues to be a dependable hedge against inflation and is still a valuable purchase” for Indians, he said.
During Akshaya, a Sanskrit word meaning “that which never diminishes,” Indians begin a new venture or buy value items with the belief it will bring luck and prosperity. The date is based on the lunar calendar and changes every year, and it’s the biggest gold festival after Dhanteras in November.
Titan Co., the nation’s largest gold jewelry retailer, is among companies offering free gold coins to buyers for purchase of a minimum amount to boost sales, while Joy Alukkas Jewellery is promising to waive off the manufacturing fees on some ornaments.
Bullion demand in India slid to 842.7 metric tons in 2014 from 974.8 tons the previous year, according to the World Gold Council. Consumption in the country, which imports almost all the bullion it needs, will rise to between 900 tons and 1,000 tons this year, the council estimates.
Gold for immediate delivery in London lost 11 percent in the three quarters through March and traded 0.5 percent higher at $1,201.62 an ounce on Tuesday, according to Bloomberg generic pricing. Futures in Mumbai have retreated 5.7 percent to 26,911 rupees ($1,331.68 an ounce) in the past year.
Indians bought 662 tons of gold jewelry valued at $26.9 billion in 2014, the most since 1995, helping the country surpass China as the world’s largest consumer last year, the council said in February. Gold is bought during festivals and marriages as part of the bridal trousseau or given as a gift in the form of jewelry.
The government raised import taxes three times in 2013, helping narrow its current account deficit to $32.4 billion in the 2013-14 financial year, from $87.8 billion the previous year, according to the Reserve Bank of India. Since then it has allowed more agencies to import gold and scrapped a rule requiring importers to sell 20 percent of their purchases to jewelers for re-exports.
Gold imports in March surged 94 percent to $4.98 billion from a year earlier, the Commerce Ministry said on April 17. Shipments climbed as jewelers sought to build stockpiles ahead of the festival, according to Prithviraj Kothari, managing director of Riddhisiddhi Bullions Ltd.
Accelerating economic growth will also strengthen gold demand this year, P.R. Somasundaram, managing director of the World Gold Council in India, said in a statement on Monday. India’s economy will likely expand 7.5 percent this year, surpassing China, according to International Monetary Fund forecasts.
“Buying behavior is returning to normalcy following a reduction of the import curbs,” Somasundaram said. “Gold is therefore set to start shining more brightly this Akshaya Tritiya.”