Gold retailers who recently faced headwinds anticipate higher sales ahead of Akshaya Tritiya, company executives said.
“Retailers are definitely stocking up for Akshaya Tritiya because we are expecting strong sales during the festive period. However, the industry is also taking a cautious approach and not taking any risks,” Dileep Narayanan, the head of treasury and banking at Malabar group of companies, said in an interview with Moneycontrol on March 21. "Sales have been weak in recent times, and we expect a pick-up soon."
Saurabh Gadgil, managing director of PN Gadgil Jewellers, said Akshaya Tritiya, Gudi Padwa and weddings in the first quarter of the new financial year could push gold sales growth to about 10 percent over the past quarter.
“Growth has been flat in the current quarter due to various factors, but going ahead, the bullish trend will continue, and India will see a strong year,” Gadgil told CNBC TV18.
Referring to the recent increase in gold prices, he said, “The surge was well taken by the market, and I don't see any setbacks.”
Akshaya Tritiya, which falls on May 10 this year, is the second-largest gold-buying festival after Dhanteras.
Gold prices climbed on most days of the past fortnight. On March 21, the spot price of gold jumped above $2,200 an ounce for the first time after the US Federal Reserve maintained its outlook for three rate cuts in 2024. The US central bank’s outlook suggested it isn’t alarmed by the recent surge in inflation.
The prices dipped slightly below $2,200 on March 22.
However, the prices may ease by about $100.
“It is likely that it will come down... and then again go to the next level,” Narayanan said.
Election impact
Domestic gold prices jumped to Rs 67,000 per 10 grams from Rs 62,000 so far this year. On March 22, gold was trading at Rs 66,930. With the Lok Sabha elections scheduled from April 19 to June 1, there is a possibility of a dip in sales, but Narayanan said it all depends on the price.
“It’s all price driven. We can’t predict what’s going to happen, but nothing is going to stop a buyer if they feel the price is right,” he said.
“I personally don’t see the elections affecting demand much. In fact, I believe there could be an upward movement in buying,” Gadgil said.
Retailers are likely to offer more discounts and schemes to beat the gloom of rising prices.
The recent gains may have been triggered by speculation over the timing of the US Fed’s long-anticipated pivot on interest rates. Data showed that traders boosted their net long positions on gold last week by the most since 2019.
UBS Group AG said the metal will gain more when US interest rates actually come down as bullion-backed exchange traded funds look likely to increase their holdings.
On the geopolitical front, Russia appears to be gaining the upper hand in its war in Ukraine, the Israel-Hamas conflict continues unabated and has led to a re-routing of global shipping, while the US presidential election at the end of the year could prove massively consequential for the markets. These global issues are boosting gold’s allure as a haven asset.
(With inputs from Bloomberg)
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