Rising Covid second wave may wipe out Akshaya Tritiya gold sales

Indian gold industry will miss Akshaya Tritiya falling on May 14 this year, too, in the wake of the raging pandemic

May 07, 2021 / 01:52 PM IST

Indian gold industry will miss Akshaya Tritiya falling on May 14 this year too in the wake of raging second wave of Covid-19 in the country.

Last year jewellers couldn’t take advantage of Akshaya Tritiya, considered to be auspicious for buying gold, on April 26, as the country was in the grip of a nation-wide national lockdown due to Covid-19. This time several states have announced lockdown and travel restrictions that are bound to hit the sales.

“We do not expect the customers to come and buy gold putting their life in danger. We recommend that customers should call the shop owners for home delivery if they want to buy jewellery,’’ said Surendra Mehta, national secretary of Indian Bullion and Jewellers Association.

In fact, many big jewellers are encouraging digital marketing of gold. "We are actively engaged in digital sales. The sales had picked up in the first quarter of 2021 as many weddings that were earlier postponed were conducted," said M P Ahammed, chairman of Malabar Gold & Diamonds.

However, he feels that the current situation in the country will impact the sales at a time when the interest in the yellow metal was going up.

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When the economy opened up partially after the first wave of Covid-19 last year, the big jewellers were able to make some gains. However, the small jewellers, who account for majority in the trade, couldn’t cover their losses.

“The small jewellers lost as much as 50 to 60% of the sales last year while the percentage came down as the size of the jewellery increased,” said B Govindan, MD of Bhima Jewellers, Thiruvananthapuram. He admitted that he could reap gains in the last few months especially in Tamil Nadu, which along with Kerala are two big gold consuming states.

According to Govindan the customers are not much bothered about price fluctuations as big jewellers have schemes to enable them to book gold in advance. `` As Akshaya Tritiya gets drowned in Covid-19, it is the small jewellers who suffer the worst,’’ he said.

Gold prices after a period of correction have started moving up again. Low global interest rates and inflation triggered a gold price rally last year. The prices went above $2000 per ounce market in August before falling to around $ 1670 per ounce. The yellow metal prices are on the ascending path once again. On Friday morning the prices were hovering around $ 1819 per ounce. It is ruling about $100 higher than during Akshaya Tritiya last year when the price stood at $ 1715 per ounce.

Surendra Mehta reckons that with inflation concern, lower bond yields and anticipated correction in equity market, the gold prices will continue to move up. `` From the current level, it may reach $ 1920 in the next 30 to 45 days,’’ he said.

But in the short term, the second wave of Covid-19 may make gold market volatile, warns Hareesh V , head of commodities, Geojit Financial Services. `` After the recovery in prices in the last one-and-a-half months the market could be choppy with mild negative growth,’’ he said.
PK Krishnakumar is a journalist based in Kochi.
first published: May 7, 2021 01:49 pm

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