MUMBAI – It was short-lived. The price of gold had burst through $1,575.95 early on May 2, before shedding some of its gains in the international market. The drop triggered a frenzy of buying in India.
As news of Osama bin Laden’s death spread across the world, the price of precious metals dropped. The small respite in prices, however, was reason enough for Indian consumers to lap up the yellow metal.
As a run-up to and ahead of a key gold-buying festival Akshaya Tritiya, Indian consumers have been waiting to book their pot of gold. And bin Laden’s death provided one such golden opportunity that was not to be missed.
The world’s largest consumer of the precious metal is set to celebrate Akshaya Tritiya on May 6, this year. Buying small pieces of gold or silver for Akshay Tritiya is believed to bring in success and wealth.
“The word `Akshaya’ means imperishable or eternal – that which never diminishes. Initiations made or valuables bought on this day are considered to bring success and good fortune. Buying gold is a popular activity during the day and even small silver icons now denote the ultimate symbol of wealth and prosperity for many households,” said Mohandas Zaveri, a bullion retailer in Mumbai.
“On Monday, investors were betting on growing demand for the yellow metal which includes a jump in prices in the near term,” said investment analyst Omkar Agnihotri, who works in a foreign brokerage firm in Mumbai.
Several bullion traders rushed in to place deals when prices dipped. Their aim was to stock up for the forthcoming gold-buying festival, when demand for gold shoots up, never mind other escalating factors.
Traders said the price of gold has risen by up to 25% since Akshaya Tritiya last year. “Looking at the present positive consumer sentiment, we had expected jewellery sales to jump by 15% in terms of volume, and the overall gold business to grow by 40%,” said All-India Gems and Jewellery Trade Federation chairman Bachhraj Bamalawal.
“However, with Osama’s death and the slide in the price of gold, sales could well jump over 60% since many jewellers have said they have booked sales at the dips,” he added.
Jewellers in Mumbai are expecting the business to grow by around 40% during the festival. Bullion house owner Ashokbhai Minawala noted that Akshaya Tritiya had proved a strong event for gold as a commodity over the last few years.
In a bid to keep up make the most of this pent-up demand, jewellers and bullion houses across India have been offering incentives and huge discounts.
“Jewellery bought and worn on this day signifies never diminishing good fortune. In sync with our customers sentiments, we have announced discount offers on some of our heavy exclusive jewellery pieces,” said Sandeep Kulhalli, vice president, at Tanishq.
Jewellery major Tanishq, which is from the house of Tata, has announced many special offers on its products. The retail firm is offering upto 25% discount on making charges of plain gold jewellery and up to 15% off on diamond-studded jewellery.
Similarly, others are offering huge discounts on ornaments set in gold or silver. “Even small icons are believed to be auspicious for the creation of wealth and good fortune. The positive sentiment associated with such festivals often motivates many customers to buy even when they do not have the required money. We don’t mind taking the payment in small instalments to facilitate this,” said Somith Shah, jewellery retailer.
Reliance Jewels, the fine jewellery specialty format of Reliance Retail Limited announced the launch of a special ‘Akshaya Tritiya pre-booking offer’.
For the first time, the firm offered `Double Gold Rate Protection’ to its customers who could pre-book jewellery for Akshay Tritiya and fix their gold rate to protect against any price increase.
Incidentally, if the gold rate on Akshay Tritiya is lower than the booking rate, the customer could avail of and get the difference back.
“It is a win-win situation for all. In addition to the protection offer, Reliance Jewels is also giving its customers a discount of $2.24 per gram on gold jewellery and a 100% discount on diamond-making jewellery charges,” said an official.
Since the particular day has now been turned into a special jewellery buying occasion, many retail outlets have also introduced special Akshay Tritiya collections, comprising stunning new designs in gold and diamond jewellery, which include Kundan, Polki, ruby emerald, Hyderabadi polkichakri and designer antique collections. All with an eye to snare the Indian consumer.
Ashok Kaul, senior vice president at Reliance Jewels said, “We have added several new designs in gold and diamond jewellery for the occasion. Since people purchase jewellery on Akshaya Tritiya to welcome prosperity and good luck, we have introduced the pre-booking offer.”
Some investment funds have even gone to the extent of testing out this theory – that buying gold on this particular day brings in success and wealth.
According to one such firm, if a consumer had bought a fixed amount of gold on Akshaya Tritya in the past 10 years, he would have earned annualised returns of 20.2%. In comparison, investments in the electronic traded funds on the National Stock Exchange on the same days, would have earned just 17.3%.
Even the World Gold Council has reinforced the tradition of buying gold on Akshaya Tritiya, by working with its various jewellery and investment partners to promote the purchase of gold on this day.
Madhumita Dutta of the World Gold Council said that investments in gold “have proved itself as the best hedge against inflation and the various economic factors that can deplete one’s wealth”.
“We are not only promoting gold by showcasing the variety and versatility of this marvellous metal, but also as a safe investment option with healthy returns. It is an age-old tradition to buy gold during Akshaya Tritiya, and attain everlasting prosperity,” she added.
Though Bin Laden’s death is expected to have a short-lived positive impact on the US currency, it does present a fresh opportunity for bottom fishing in gold. Markets, which had initially rallied on the news of Bin Laden’s death, finished muted. It was anything but that in India, with people booking on dips. The actual bar, coin or jewellery would only be brought home on May 6, with great pomp and ceremony.