A day prior to the Hindu festival of Akshya Tritya, gold traders are expecting that sales would be around 25% more in the week as against the same period last year. “We are expecting a jump of around 25-28% in gold sale in terms of volume in the festive week as against last year,” said Sanjay Agarwal, chairman, World Gold Council (WCG).
[quote]The main reason for this is the rise in gold prices which has grown by 22% year-on-year in past five years and people expect prices to rise further.[/quote]
But according to the WCG data, the sale of gold in volume terms has dipped by 7% in year 2011 against 2010. Diamond jewellery has also grown at a faster rate. “Due to high gold prices many people are preferring diamonds and the growth of diamond jewellery is about 40% compared to last year in the week,” added Agarwal.
There has been a steady increase in the demand for gold despite the rise in prices and bullion and jewellery witness equal amount of demand. According to the industry experts it was expected that buyers would stay away this year from buying gold. This had resulted in many jewellery retailers were offering free-bees to customers.
Jewellers in India have just recently ended a two week strike over the governments doubling of import and customs duties on gold, the second increase this year.
According to the World Gold Council, demand for gold in India dipped by 7% in 2011 from 2010. Demand for gold jewellery dipped by 14% to 567.4 tonnes in 2011 as against 657.4 tonnes in 2010.
Despite a challenging year, India remained the largest country for gold demand in 2011, the strong intrinsic and emotional affinity towards gold in India will continue to fuel demand over the coming year. India lost its top spot in the fourth quarter of 2011 to China, and in 2012 again as Chinese bought 190.6 tonnes of gold against India’s 173 tonnes. World Gold Council predicts that China may as well overtake India in 2012 gold purchased annually.
Indians traditionally purchase gold in the form of jewellery more than as a pure metal for investment. However, in 2011, gold investments recorded a marginal rise of 5% from 349 tonnes in 2010 to 366 tonnes.
Despite this, in absolute terms the purchase of jewellery still occupies bigger mind space in Indian consumers despite the change in lifestyles that make jewellery less hot in urban circles.
Gold has historically been seen as a safe haven. This Akshya Tritya, the big question is whether the lingering global uncertainties that add to the metal’s lustre will persist or not.
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