Prices, rising rates mar Akshaya Tritiya gold sale

MUMBAI: The high gold price and interest rates are spoiling the party for gold sales ahead of Akshaya Tritiya falling on April 20.

The festival, seen as an auspicious day to purchase gold, led to frantic buying in 2006 and was one of the main factors for the price to shoot up to $720 per ounce in May, the highest level in over two decades. However, this year offtake is just about picking up, in the last 10 days. This is already a fortnight later than usual.

Suresh Hundia, leading exporter and president, Bombay Bullion Association said, “Daily physical offtake in the market has picked up to about 400-500 kg in Mumbai since April beginning, from 250 kg a day, ahead of Akshaya Tritiya.”

However, this is only about 50% sales of the previous few years. Prithviraj Kothari, of Riddhi Siddhi Bullion said, “The high interest rates are leading investors to put their money in better yielding assets compared with gold. The high gold price has also proved a deterrent.”

The wholesalers normally get their orders a month in advance from retailers. However, this has been delayed by a fortnight. Krishna Nathani of India Bullion based in Chennai said, “Retailers give their orders almost a month in advance to wholesalers as they expect buying to pick up during the festival. This year, the retail buying could be slower than before as wholesalers have got their orders late.”

The international gold price has moved up from $667 per ounce levels on March 29 and is currently trading at $678 per ounce. In India, gold has moved in the range of Rs 9,200 to Rs 9,500 per 10 gm in the last month in the Mumbai spot market.

Jewellers have promoted Akshaya Tritiya in the last few years to market gold leading to a marked surge in purchase of the yellow metal during this time.

Gold is expected to stay fundamentally strong in the next few weeks, according to MAPE Admisi Commodity Research, with active buying across Asia and strong base metal prices. Investors are expected to move part of their money back into gold from currencies after Bank of Japan kept interest rates unchanged.