Consumers are shying away from buying gold on the auspicious day of Dhanteras, today (25 October). Though gold has been the piece de resistance for festivals and weddings that follow the festive period, the footfalls in sales are much less compared to last year.

Dhanteras, which is being celebrated in northern and western parts of India on Friday, is considered an auspicious day for buying gold, silver and other valuables.

India is the world’s largest consumer and importer of gold. However, the sharp rise in the gold prices have impacted trade and consumer outlook in Q3, experts said.

The price of gold per 10 grams has seen sharp swings. On Friday-Dhanteras day, gold prices rallied Rs 220 to Rs 39,240 per 10 gram in the national capital. The yellow metal had closed at Rs 39,020 per 10 gram here on Thursday.

On Dhanteras day in October 2018, the price of gold ranged around Rs. 31,600 per 10 grams. Gold prices rose above Rs 40,000 mark in September 2019. “This means a yield of 20 percent in just a years’ time — the highest during the last 10 to 15 years’ time and is thus grabbing interests of a lot of institutions and individual investors”, said Sunilkumar Katke, Head – Commodities & Currency, Axis Securities.

Gold sales today

Consumers have not thronged gold stores in large numbers to make purchases today. Some jewellers feel the footfalls are low as it is working day today. “We have got reports of slow sale from across the country. However, we expect the momentum to gather after 4 pm. Despite rain alerts, we expect good business this Dhanteras, especially after evening,” All India Gem and Jewellery Domestic Council (GJC) chairman Anantha Padmanabhan told PTI.

But some jewellers were upbeat as they have witnessed some positive movements today. “We saw a surge in the purchases of contemporary wearable jewellery, along with a steady purchase of traditional designer gold jewellery and bookings for wedding season. Overall, we witnessed a positive rise in sales as compared to usual days. We are optimistic and looking forward to the wedding season to retain the sheen of jewellery sector,” said Rohan Narang, MD, Hazoorilal Legacy.

Titan Jewellery Division Senior Vice President (Retail and Marketing) Sandeep Kulhalli said: “The market has been impacted by a sudden gold rate surge in July, and general downturn in consumer spending. Growth has been muted so far but we have seen an upsurge in our business since the last few days.”

Gold sales dented

The sharp rise in price of the yellow metal is due to a slew of reasons ranging from global economic slowdown, the contentious US-China trade dispute, concerns over Brexit, Fed changing its stance and adopting multiple rate cuts, US-Iran geopolitical unrest, central banks buying gold to secure their reserves, fears of global slowdown and demand from ETF’s, among others.

Spot gold prices are expected to trade in a firm range as pick up in festival demand has raised prospects of rise in consumption in upcoming wedding season despite higher prices, said HDFC Securities, senior analyst-commodities, Tapan Patel said.

In the international market, gold was ruling higher at $1,506 per ounce, while silver was quoting at $18.05 an ounce.

“International gold prices were trading higher on global market uncertainties. Gold prices rallied on safe-haven buying on Brexit concerns and weak economic data from the US,” Patel said.

Stating that high gold rates and demand slump are likely to dent sales this time, Delhi’s Karol Bagh Jewellery Association President Vijay Khanna said most buyers are restricting their purchase to tokens, especially for investment purpose.

“We see flat sales this Dhanteras but hope to recover during the wedding season in the coming days,” he added.

Kumar Jain of UT Zaveri from Mumbai’s Zaveri bazaar said, “Since the muhurat was between 9 am to 12.30 pm, we are getting footfalls, mostly from those of pre-booked orders who want to avoid the evening rush.”

Being a working day, more footfalls are expected in the evening after office hour, he added.

Diamond, silver coins sales picking up

Diamond sales are outgrowing gold sales. Tanishq stores across the country are all packed since the last few days and hence the company is expecting a robust Dhanteras and Diwali sales, Kulhalli said.

Khanna Gems Pvt Ltd Managing Director Pankaj Khanna said there is a “positive trend” in terms of silver coin sales this time as buyers are preferring white metal due to high rates of gold.

“We are hopeful of crossing 100 kg silver coin sales through our online platform, up from 23 kg last Dhanteras days,” he said, adding that the company is selling hallmarked silver coins.