Gold sales on the most auspicious day in India to buy the metal tumbled this year as high prices and concerns about an economic slowdown saw customers limit purchases.
Prices in the world’s second-biggest gold consumer remain near the record reached last month, while the country’s growth has slipped to a six-year low, unemployment is rising and a lending crisis is affecting cash flow.
India’s gold imports fell for a third month in September to the lowest in more than three years as jewellers cut purchases on poor demand.
Dhanteras, which fell on Friday and comes ahead of Diwali today, typically sees a pick up in demand as Indian shoppers lock in gold purchases.
This year though, there were shorter queues outside jewellery stores in Mumbai’s Zaveri Bazaar, the country’s biggest bullion market.
Sales were as much as 20% lower than last year as customers shied away from making big purchases.
“What is keeping the buyers away are the high prices and the slowdown in the economy,” N Anantha Padmanaban, chairman of the All India Gem and Jewellery Domestic Council, said by phone. “People have their savings, but they are safeguarding it for the future as they don’t know what is in store for the next two to three months. So the fear is holding them back from spending.”
India’s peak wedding season begins soon after Diwali, making the final quarter typically the strongest for gold demand. Some buyers are combining their festival and wedding purchases, marking a structural change that’s occurring as prices go higher, according to Chirag Sheth, a consultant at London-based Metals Focus Ltd.
“I don’t have any special attraction towards gold, but since it is a tradition, we ensure that all our gold purchases of the year are made on the auspicious day of Dhanteras,” said 18-year-old Supriya Dixit, who was shopping with her mother at a store in Zaveri Bazaar.
The two bought a ring for her sister’s engagement, combining a wedding purchase with Dhanteras.
Gold rings at a Zaveri Kapoorchand Lalchand store on October 25.
“Prices are high, so we have gone in for an 18 karat ring, bringing down our budget for Dhanteras by 12% from the cost of the earrings we bought for my mother last year,” she said. Benchmark gold futures in Mumbai touched a record Rs39,885 ($562) per 10 grams in early September and are more than 20% higher than last year.
Prices could test Rs41,500 over the next 12 months, according to Kishore Narne, head of commodities and currency at Motilal Oswal Financial Services Ltd. Titan Co, the country’s biggest by market value, declined 2.9% in Mumbai, halting a 10-day rally.
Tribhovandas Bhimji Zaveri Ltd slumped 5.8% and PC Jeweller Ltd dropped 4.1%. Retailers are seeking out more lighter-weight jewellery to boost sales, while soaring prices have prompted some people to prefer giving gift vouchers instead of gold for weddings, said Raju Solanki, owner of Zaveri Kapoorchand Lalchand store in Mumbai.
“Gifting has almost vanished in gold,” he said. “Earlier people used to buy jew
elry for gifting in the range of Rs5,000 to Rs10,000. You can’t really buy anything in gold in that range nowadays as just one gram of gold will put you back by Rs4,500.”
Demand for silver was also sluggish.
Rishabh Angara, 25, said his wait to buy silver coins in Zaveri Bazaar was the shortest he’d had in years. “Usually, I have to wait 45 minutes at least before I can make my customary Dhanteras purchase of 50 grams. But this year, I think I should be done sooner.”
A salesperson is seen inside a jewellery showroom in Mumbai. Gold sales on the most auspicious day in India to buy the metal tumbled this year as high prices and concerns about an economic slowdown saw customers limit purchases.
