Prices, inflation dent gold demand on Akshaya Tritiya
MUMBAI (Reuters) - Spending on gold at this year's Hindu and Jain holy festival of Akshaya Tritiya in India has been subdued compared with the usual splurge, as families struggle with rising expenses and high prices for the ultimate status symbol.
Gold consumption is likely to fall by as much as 50 percent to 10 tonnes at the festival on Tuesday, said Prithviraj Kothari, president of the Bombay Bullion Association.
"Sales are less than expected as prices are high and even inflation is high. So there are no savings," he said.
Akshaya Tritiya is the second-biggest gold-buying festival after Dhanteras in India, one of the world's top buyers of gold where the level of demand can have an effect on global prices.
Local prices of the yellow metal have risen, however, due partly to the rupee, which has depreciated 10 percent so far in 2012, and the doubling of the import duty to 4 percent.
India's gold imports are expected to fall to 655 tonnes this year from a record 969 tonnes last year, a Reuters poll found.
"Sales were good last year, but that is history," said Daman Prakash Rathod, director with Chennai-based wholesaler MNC Bullion.
"The ordinary person has to shell out a budget of 4,000 rupees per month or more. Incomes have not improved, while expenses have risen manifold," he added.
"The love for gold is not lost and never will be lost, but there is lack of enthusiasm," Rathod said.
For example, Manisha Gajani, a Mumbai-based homemaker, has been an avid buyer of gold at every Indian festival for the past 20 years.
"An investment in gold of 6,000 rupees a few years ago has given us 28,000," said Gajani, 42, explaining her gold-only investment rationale.
But this year she has bought only one 5 gram gold coin to celebrate Akshaya Tritiya, half of her purchase last year.
"We have to adjust according to our household expense budgets," she said.
For graphic on India/China gold demand, click: r.reuters.com/xem66s
Meanwhile, sales volumes of gold exchange-traded funds (ETFs) in India have grown this year due partly to the ease of buying and selling over the Internet.
"People have now realised it is a very efficient way to buy gold," said Lakshmi Iyer, head of fixed income and products of Kotak Mutual Fund.
Trading in gold ETFs jumped on Tuesday, because people have started presenting the paper instruments as gifts rather than the metal itself.
Over 200,000 units of Kotak Gold ETF traded on Tuesday, compared with a typical daily average of 2,000 to 5,000 units, Iyer said.
The volume of spot gold traded electronically on the National Spot Exchange reached 30 kg on Tuesday, up from 13 kg on Monday.
Twelve Indian mutual fund managers are offering gold ETF products, which together amounted to 97.95 billion rupees in assets by end-February.
ETFs' holdings of the metal are still small by comparison with India's annual consumption of about 900 tonnes of gold, but brokers and fund managers see the potential for growth of this paper gold.
(Editing by Malini Menon and Jane Baird)
- Tweet this
- Share this
- Digg this
- Google launches new email service dubbed "Inbox"
- Lax security in focus after attack at Canada's parliament
- U.S.-led air strikes killed 521 fighters, 32 civilians in Syria - monitor
- India hope to get boxer Sarita Devi's suspension reversed
- Motor racing-Caterham F1 factory closed, team's fate in the balance
India could allow commercial coal mining by foreign companies if they set up units in the country, opening the door for global giants like Rio Tinto to access the world's fifth largest coal reserves, a source familiar with the matter said. Full Article