Rural gold demand may not pick up during Akshaya Tritiya

Kolkata: Vishnu Mukati, a soybean farmer from Ujjain in Madhya Pradesh, is not keen to buy any gold jewellery this Akshaya Tritiya, which falls on May 2. Vishnu, whose family depends only on agriculture, is keeping his cash intact so as to tide over any crisis that may arise due to weak rainfall. "I can buy some gold now. But I am not sure whether I will be able to liquidate it when I need it the most. Moreover, gold price may crash at that time," he said.

Like Vishnu, Suraj Singh, a paddy farmer from Bihar, is also taking a cautious step this Akshyay Tritiya. "I will not buy gold this year. If monsoon is less it will affect my crop. I want to wait and watch for the time being," Singh said.

The rising concern of farmers over weak monsoon is likely to take away the sheen from rural gold demand this year. "Weak monsoon forecast coupled with elections will push down rural demand by at least 20%," said Amit Sampat, director, Pushpak Bullions. Rural India contributes nearly 60% of India's gold consumption. India's gold demand in 2013 came down to 974.8 tonnes following wide scale curbs imposed by the government to tame hunger for the precious metal.

Added Haresh Soni, chairman, All India Gem & Jewellery Trade Federation (GJF) said that IMD has predicted some places will have normal monsoon and some places will have deficient monsoon. "While this is going to affect the rural sentiment, the elections will have a much higher impact on demand. The ticket size will be much less compared to previous year."

While the mood in rural India is muted, jewellers say that demand in urban India will shot up in the range of 6 per cent -15 per cent vis-a-vis last year. Jewellers in south India are the most optimistic about Akshaya Tritiya sales this year. However, jewellers across India say that demand for gold coins and bars will be much less as a rally in equities in last couple of months has attracted investors towards the capital market.