Gold Prices Reach New Heights, Impacting Buyers While ETFs Gain Popularity

The soaring prices of gold have dampened demand during the auspicious occasion of Akshaya Tritiya, despite various promotional schemes from jewellers aimed at enticing buyers. Retail prices for gold have remained high, hovering between Rs 94,000 and Rs 95,000 per 10 grams, following a record surge earlier in April. While traditional gold purchases have seen a decline, interest in gold exchange-traded funds (ETFs) has surged, indicating a shift in consumer behavior towards investment options.

High Prices Impact Gold Demand

The recent spike in gold prices has significantly affected consumer sentiment on Akshaya Tritiya, a day traditionally associated with gold purchases in India. Earlier this month, gold prices surpassed the Rs 1 lakh mark per 10 grams, reaching an all-time high. As a result, many consumers have opted to hold off on purchases, leading to a lukewarm response from buyers. Jewellers across the country have attempted to counteract this trend by introducing various schemes, such as reduced making charges and promotional offers. For instance, the Malabar Group has offered discounts of up to 25% on making charges for gold and studded jewellery, along with a booking facility that allows customers to secure prices with a minimal down payment.

Despite these efforts, the overall mood among buyers remains cautious. Darshan Gupta, a partner at Mangatrai Jewellers in Hyderabad, noted that the sentiment is significantly lower than in previous years. He reported that business could be down by at least 30% compared to last year’s Akshaya Tritiya. This decline in demand is particularly evident in traditional gold purchases, as consumers weigh their options amid rising prices.

Jewellers Adapt to Changing Preferences

In response to the changing market dynamics, jewellers are adapting their strategies to attract customers. Many are focusing on offering more affordable options, such as lightweight gold jewellery and silver items. PC Chandra Jewellers, for example, has reported an increase in customers seeking these budget-friendly alternatives. Additionally, some diamond pieces have gained popularity, as consumers look for unique items that fit their financial constraints.

The strategies employed by jewellers reflect a broader trend in consumer behavior, where buyers are increasingly cautious about spending on gold. The emphasis on lightweight and less expensive jewellery indicates a shift towards practicality in purchasing decisions. While the volume of gold sold may be lower than in previous years, jewellers are still seeing a steady interest in value-driven purchases.

Surge in Gold ETFs

While traditional gold sales have faced challenges, the demand for gold exchange-traded funds (ETFs) has seen a notable increase. On Wednesday, trading volumes for ETFs reached approximately Rs 340 crore on the National Stock Exchange (NSE) and nearly Rs 30 crore on the Bombay Stock Exchange (BSE). This shift suggests that investors are turning to ETFs as a viable alternative to physical gold, seeking to hedge against potential price increases.

The growing interest in gold ETFs reflects a broader trend among investors who are looking for more flexible and liquid investment options. As gold prices continue to fluctuate, ETFs provide a way for individuals to gain exposure to the gold market without the need for physical storage or concerns about making charges associated with jewellery purchases. This trend may indicate a significant change in how consumers approach gold as an investment vehicle.

Market Overview on Akshaya Tritiya

Despite the challenges posed by high gold prices, the overall market activity on Akshaya Tritiya showed resilience. Approximately 20 tonnes of gold, valued at around Rs 18,000 crore, were sold across India on this auspicious day. In Mumbai alone, sales are estimated to have reached about 2.5 tonnes, worth approximately Rs 2,350 crore. While the volume of sales may have decreased compared to previous years, the total value of transactions has remained relatively stable, according to data from the India Bullion & Jewellers Association.

This balance between volume and value highlights the complexities of the current gold market. As consumers navigate high prices and changing preferences, jewellers are finding ways to maintain sales through innovative offers and promotions. The combination of traditional purchases and a growing interest in ETFs suggests that the gold market is evolving, with consumers adapting to new economic realities while still seeking ways to invest in this precious metal.

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