Higher inflation may add sheen to bullion mkt

Mumbai: With the prolonging recent global turmoil sparking concerns, consumers are resorting to ways to beat rising inflation as they are expected to resort to the traditional way of buying gold this Akshaya Tritiya, which falls on May 3, to ward off inflation.

Light weight and contemporary design jewellery is finding interest this Akshaya Tritiya, according to industry insiders.

In 2019 (pre-pandemic) on the day of Akshya Tritiya, there was a business of gold and jewellery trade for about 29,000 kg at Rs10,000 crore when the rate was Rs35,000 per 10 gram of gold. Assuming lower sales of 20,000 kgs due to higher price at Rs50,000 per 10 gm, this Akshaya Tritiya market is estimated to reach pre-pandemic levels of Rs10,000 crore.

There are roughly four lakh gold and jewellery traders across India. According to the national convener of All India Jewellers and Goldsmith Federation, the apex organisation of India's jewellery trade, gold is the second-highest single-day sales on Akshaya Tritiya and Dhanteras.

Talking to Bizz Buzz, Parag Shah, Director, HK Jewels (KISNA Diamond Jewellery), said: "KISNA expects to target Akshaya Tritiya and marriages through holding 66 Super Normal Mass Consumer Contact (SNMCC) exhibitions all over India including West Bengal, during April through May. These exhibitions have already started in April with an aim to target marriages as also Akshaya Tritiya."

The median age in India is 28.40 years and most of the marriages are in the age group of 23-35 years age group. On a population base of 135.26 crore Indian, about 15 cr is estimated to fall in the above age category. Assuming 25 per cent opt for marriage, the yearly marriages estimated is roughly about 4 cr.

In pre-pandemic year 2019, the Akshaya Tritiya sale was 29,000 kgs. Assuming an average rate of Rs35,000 per 10 gm, the sale amount arrived at is Rs10,000 cr. In year 2022, even at high price and lower volume, we expect sales to cross pre-pandemic levels assuming average rate of Rs50,000 per 10 gm. In an optimistic scenario, the sales are expected to touch Rs15,000 cr.

In reply to a query, Shah said: "We have positive response from 66 ongoing SNMCC exhibitions. We expect a growth of 15 per cent in value this Akshaya Tritiya."

At our all India exhibitions at local level, buyers are least bothered on geo-political impasse for buying gold. Considering the response, we expect footfalls during Akshaya Tritiya of over 50,000 at the exhibitions running at that point in time, he said.

Meanwhile, gold prices rallied on the back of geo-political alignment on the back of uncertainty. This re-alignment is likely to prolong. Hence, prices of gold are likely to maintain traction. The incremental flow of new investors in cryptos' is also likely to move towards buying physical gold.

This is also likely to keep gold prices firm. Spot gold prices rallied 9.87 per cent from Rs48,157 per 10 gm (995k) on January 1, to Rs52,912 on April 14 effectively countering March retail inflation of 6.95 per cent announced by RBI on April 12. London Fix gained from $1811.40 per troy ounce as on Jan 4 to $1963.25 as on April 14, an increase of 8.38 per cent during the period. Also, uncertainty on crypto price movement and lack of understanding is making it easier

for a common man to opt for physical gold. Veteran investors mentioned holding 10 per cent in gold as currencies would be devalued.

Ravindra Rao, CMT, EPAT, V-P (head- commodity research) at Kotak Securities, said: "COMEX gold trades modestly higher near $1905/oz after a sharp two per cent decline yesterday. Gold has inched up after yesterday's sell-off as US dollar index retreated from 2-year high on lower bond yields and stability in equities."