Gold for immediate delivery fell 1.1% to $1,432.78 an ounce at 6:49 p.m. in Mumbai. While bullion has rebounded from a two-year low of $1,321.95 on April 16, it is 25% below the record $1,921.15 reached in 2011.
“The dramatic increase in demand this time due to the slump in prices has led to shoppers advancing purchases,” Soni said in a phone interview from New Delhi. “If the positive sentiment continues, then demand in May will also be good. All jewelers are optimistic about demand during Akshaya Tritiya and advance bookings this year have been very good.”
Jewelers in India have announced a slew of offers from discounts on ornament-making charges to gift vouchers to lure buyers on Akshaya Tritiya. A bullion manufacturer, Valuemart Gold and Jewels Ltd., roped in cricketing icon Sachin Tendulkar to promote its gold coins. The World Gold Council and India Post are offering a 7% discount on coins, while Bullion India is promising free home-delivery for online purchases.
“There are more people buying gold jewelry this year rather than coins as prices have slumped,” Yashovardhan Zaveri, managing director of Tribhovandas Bhimji Zaveri Delhi Pvt., said from his jewelry store in New Delhi. “Normally, coins are preferred on auspicious days.”
Most stores will be open for business until midnight today as the summer heat may keep shoppers indoors during the day, said Soni from the trade federation.
“Supply is a major problem for Indian jewelers as they are getting only about 20% of their requirements,” he said. “Because of the huge demand right now in India and China, banks are quoting a higher premium.”
Banks in India are charging a premium of $10 an ounce compared with $2 before prices slumped, he said. Premiums may ease to $4 by mid-June when demand typically eases because of the monsoon, he said.
The Reserve Bank of India today said it would immediately restrict imports on a consignment basis by banks only to those required to meet the “genuine” needs of jewelry exporters. The move is part of its plan to contain a record current-account deficit and was first announced on May 3. The decision may drive up premiums further, said Kumar Jain, vice president of the Mumbai Jewellers Association.
The trade deficit widened in April to $17.8 billion from $10.31 billion in March as gold and silver imports more than doubled to $7.5 billion in April from a year ago, Anup Pujari, director general of foreign trade, said in New Delhi today.
India’s gold imports dropped 11% last year to 860 tons from a record 969 tons in 2011, the council estimates. Demand for jewelry and investment fell to 864.2 tons in 2012, the second straight year of declines, it said.
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