It’s Dhanteras – the festival that is marked by buying gold and other riches – but bullion traders are missing the usual festive spirit this year.
While jewellers are pinning their hopes on the days leading to Diwali for a revival in demand, they are expecting that the sales may fall by 20-40 percent over last year’s festive business.
Rise in gold prices by 30 percent in the last three to four months, higher import duty, and economic slowdown have led to a subdued sentiment among consumers in the season of pre-Diwali sales, they said, speaking to The Quint.
A city store franchisee owner of jewellery chain Senco Gold said that sales will likely be lower during this Diwali, but there was a “traction in demand in the last two or three days” and almost all organised jewellers are “offering discounts to push sales”.
“An overall wait-and-watch consumer sentiment, underpinned by lifetime high gold prices in rupee term, has been reported across regions. The recent softness in price has infused a sense of volatility in price movements that has not helped," World Gold Council MD India, Somasundaram PR, told news agency PTI.
He said months of July and August saw imports dipping by 60 percent of last year's figures indicating weak trade sentiment.
"Gold continues to be at a significant discount on account of muted demand and an active grey market, impacting organised manufacturers, refiners and jewellers," he said.
Meanwhile, prices of gold went up by Rs 75 to Rs 38,945 per 10 gram in the national capital on Thursday, 24 October.
Is It a Good Idea to Buy Gold Then?
Despite the surge in price and sluggish demand, industry experts are suggesting that buying gold is still a good bet.
Speaking to The Quint, commodities expert Anuj Gupta said that gold has offered good returns to investors in the past few years and is still expected to do so.
“In the last five years, gold has given almost 44 percent returns, while if one looks at data for the last 10 years, the figure goes up to 115 percent. In comparison, equities have given 40 percent returns in the five-year period.”Anuj Gupta, Commodities Expert
He suggested buying gold ETFs (exchange traded funds) or bonds. Stock brokers, quoted by PTI, too, said the trend to go for gold ETFs has been gaining popularity as it offers quick liquidity and does not involve any making charge.
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