Gold jewelry stores in India this year were less busy on the most auspicious day to buy the precious metal, as higher prices and the effects of the COVID-19 pandemic on incomes, as well as infection fears, kept consumers away.
India’s gold shopping peak typically comes ahead of Diwali, or the Festival of Lights, that was celebrated yesterday by the country’s more than 900 million Hindus.
Referred to as Dhanteras, the day is considered a blessed time to buy gold, vehicles and major appliances or to start new ventures, and the festival is associated with wealth and prosperity.
Many stores remain open until midnight the day before Diwali, when jewelers offer huge discounts and freebies, and some shoppers take time off from work to make their purchases.
Purchases during the Diwali period last year languished because of a weak economy and high prices.
Spot gold on Friday added 0.6 percent to US$1,887.78 an ounce, down 3 percent for the week.
It is looking much worse this year, with jewelers facing the poorest sales in a dozen years in the festival quarter of October to December, Metals Focus Ltd said.
“We expected sales to be around 80 percent of last year’s levels, but we are seeing only about 65 percent to 70 percent,” All India Gem and Jewellery Domestic Council chairman N. Anantha Padmanaban said. “But even that’s OK because the year has not been kind to us. We started off with barely any sales in the first two months. So this is far better.”
Gold demand in India has been battered by the coronavirus outbreak after the Indian government announced the world’s biggest lockdown in March, shuttering stores and bringing economic activity to a standstill.
Some shoppers, such as 34-year-old Divya Pal, still visited their local jewelry stores on Dhanteras to make their traditional token purchases of gold.
“We were scared to step out because of the virus and crowds, but we had to make our Dhanteras purchases,” she said, while browsing ornaments at Mumbai’s U.T. Zaveri jewelry store.
Lower incomes also kept many away after millions lost jobs, while others saw a bigger need to save money in an uncertain period.
While demand from retail consumers has eased, the metal is still a haven for investors.
Sales of gold jewelry, bars and coins almost halved during the January-to-June period from a year earlier, according to data from the World Gold Council.
Demand on Dhanteras was slightly better in so-called tier 2 and 3 cities compared with more urban areas. Higher disposable incomes among farmers and a better performing agriculture-based economy in rural towns and cities are expected to boost demand from vehicles to cement to jewelry.
“The footfalls were up by 10 percent to 12 percent from last year, but the average ticket size in terms of weight has gone down because of the significant increase in price on a year-on-year basis,” said Vaibhav Saraf, director at Aisshpra Gems and Jewels.
Additional reporting by Reuters
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