Economic slowdown impact: Gold, silver sales down by up to 40% this Dhanteras; high prices, low consumer spend hit demand
Dhanteras was a muted affair in most markets across the country with traders complaining of lesser footfall and reduced consumer spending.
About 6,000 kg of gold worth Rs 2,500 crore was estimated to have been sold till evening on Dhanteras day, as against 17,000 kg of gold worth Rs 5,500 crore on this day in 2018
Sales were down as prices of both gold and silver have sharply increased from over last Dhanteras, which has weakened the demand
The western region in the country is doing brisk business as compared to other regions as Dhanteras is an important festival in that region too
Dhanteras was lacklustre this year as sale of gold and silver dipped by as much as 40 percent in the wake of high prices and lower consumer spending hit demand.
Dhanteras, which is considered to be the most auspicious day in Hindu calendar for buying items ranging from precious metals to utensils, was a muted affair in most markets across the country with traders complaining of lesser footfall and reduced consumer spending, reported Reuters.
On Friday, gold prices rose by Rs 220 to Rs 39,240 per 10 gram in the national capital, up by 20 percent as compared to 2018 Dhanteras when the rates stood at Rs 32,690 per 10 gram.
According to the Confederation of All India Traders (CAIT), about 6,000 kg of gold worth Rs 2,500 crore was estimated to have been sold till evening on Dhanteras day, as against 17,000 kg of gold worth Rs 5,500 crore on this auspicious day in 2018.
"As per an estimate, there was a decline of business from 35 to 40 percent which is a cause of major worry for the traders," CAIT's Gold and Jewelery Committee chairman Pankaj Arora said in a statement.
Sales were down as prices of both gold and silver have sharply increased from over last Dhanteras, which has weakened the demand, he said, adding it was perhaps the "most disappointed Dhanteras" for the traders in past more than 10 years.
Dealers offered discounts of up to $4 an ounce over official domestic prices this week, the lowest since the first week of June. Discounts have been falling due to lower imports in the last few months, but could widen again if demand falters after the festival, said Mukesh Kothari, director at Mumbai bullion dealer RiddiSiddhi Bullions.
However, high prices could push Diwali demand this weekend lower by 20 percent from last year, Anantha Padmanabhan, chairman of All India Gem and Jewellery Domestic Council said.
Gold futures were trading around Rs 38,372 per 10 grams on Friday, having hit a record Rs 39,885 last month en route to a roughly 22 percent gain so far in 2019.
"The sharp price rise and deep discount in the bullion market impacted trade and the consumer outlook in (the) September quarter. However, Dhanteras seems to have changed this as had been expected," said Somasundaram PR, managing director of the World Gold Council's Indian operations.
Most consumers are going for token buying of lesser value and are waiting for price correction for purchase of wedding jewellery, he said.
The western region in the country is doing brisk business as compared to other regions in the country as Dhanteras is an important festival of there, he added.
Meanwhile, T S Kalyanaraman, chairman & managing director, Kalyan Jewellers, said that his firm witnessed a double digit growth during this Danteras in revenue as compared to last year.
“This Dhanteras, Kalyan Jewellers has witnessed a double digit growth in revenue when compared to last year. The positive trend is backed by the growth in the studded and diamond segment. Wedding season purchases further propelled this spike. The Shubh Muhurat associated with buying jewellery on Dhanteras falls on two days, thus allowing for Friday evening as well as weekend sale on Saturday and this is proving to be an advantage," he said.
— With inputs from agencies
ETFs performed well at 237 tonnes during the April-June period, while bar and coin demand was also up in a number of markets, including the US, at 25 tonnes
In August, WGC had reported that the country's gold demand fell by 30 per cent to 247.4 tonnes during the first six months of 2016 from 351.5 tonnes in the year-ago period
Following the coronavirus outbreak, the gems and jewellery sector in the country has come to a standstill with retailers managing to do only 20-25 percent business due to fewer footfalls amid fear of the virus' spread, according to an industry body