Gold Demand Slumps in Bengaluru Ahead of Akshaya Tritiya Festival
Despite a recent easing in gold prices from their peak levels, demand in Bengaluru has remained notably subdued in the lead-up to Akshaya Tritiya, which is scheduled for Sunday. Jewellers across the city are reporting a significant decline in bookings, with estimates pointing to a 25% drop compared to previous years. This downturn is largely attributed to buyers holding back due to ongoing price volatility and global uncertainties, particularly stemming from the West Asia conflict.
Price Fluctuations and Consumer Hesitation
Gold prices have experienced a sharp increase over the past year, rising from a range of Rs 7,500 to Rs 8,000 per gram to nearly Rs 15,000 per gram. Although there has been a slight correction recently, this dip has not spurred higher demand. Many consumers are anticipating further price softening, leading to a cautious approach. Silver prices have also surged, moving from about Rs 100 to Rs 250 per gram, adding to the overall market instability.
Sharavana TA, president of the Karnataka Jewellery Association, highlighted the impact of these fluctuations. He noted that customers are closely monitoring global conflicts, as these events heavily influence gold rates. "Usually, many book items a month in advance. This time, due to high prices, lightweight jewellery is in demand," Sharavana explained. He added that the association is promoting smaller items like one-gram gold coins and five-gram silver coins, with temple and antique jewellery also seeing increased interest. However, overall bookings remain down by around 25%.
Mixed Outlook Among Jewellers
The sentiment among traders is not optimistic, according to Surendra Mehta, national secretary of the India Bullion and Jewellers Association Ltd. He stated that there has been no uptake in sales despite gold prices moving in both directions, linked to the prevailing uncertainty. In contrast, some larger stores are expecting stronger sales. Dinesh Pagariya, managing director of JJJ Jewellers Pvt Ltd, anticipates a 20% increase in sales. "Prices have come down by 10% now, which is a golden opportunity for many. Most customers are looking for jewellery rather than gold bars and coins," Pagariya said.
The Rise of Digital Gold
Amidst the subdued physical demand, digital gold is gaining popularity, especially among younger consumers. This trend is driven by convenience and the ability to invest in small amounts without the need to visit physical stores. Vaibhav Joshi, a second-year BA student, shared his experience: "I invest my leftover pocket money each month in digital gold because I feel it is a safe way for my money to grow."
However, traditional jewellers express concerns about the long-term impact of digital gold. A gold store owner pointed out potential drawbacks: "Digital gold may be convenient, but it comes with platform charges and limited resale margins. Meanwhile, physical gold can be sold at market rates and offers greater security."
As Akshaya Tritiya approaches, the gold market in Bengaluru reflects a complex interplay of high prices, global tensions, and shifting consumer preferences, with digital alternatives emerging as a notable trend amidst the overall demand slump.
