NEW DELHI: Indians’ affinity for buying gold is well known. And for many, Akshaya Tritiya is the most auspicious day for gold purchases. What could spike more interest in gold this Akshaya Tritiya (Tuesday, April 21) is that prices are down nearly 10 per cent from last year’s level.
During last year’s Akshaya Tritiya (May 2, 2014), prices were hovering around Rs 30,000 levels/10 gm. Currently, they are down to around Rs 27,000 levels.In fact, many jewellers have reported strong buying interest ahead of Akshaya Tritiya and expect this year’s sales to grow 20-25 per cent. But analysts say that buyers should refrain from aggressive purchases on this Akshaya Tritiya.
Anand James of Geojit BNP Paribas Financial Services said that gold continues to remain a weak territory. Domestic gold prices have been showing a declining trend since peaking at nearly Rs 33,000 levels in 2012. Though gold has found some support at current global levels of $1200 an ounce, there are few triggers for it to move higher, he added.
India is one of the biggest importers of gold and domestic prices take a cue from international prices.The appeal of gold as a safe haven asset has diminished significantly in recent years. Despite super-low interest rates and mega quantitative easing programs in many parts of the world, inflation has remained below the target of world’s major central banks. Thus gold’s primary appeal as a safe-haven asset has taken a beating.
The recent unseasonal rains in the country are also a cloud over the future rural demand of gold the country, added Mr James.
Vikas Vaid, head of commodities and currency at Prabhudas Lilladher, said investors can take some exposure to gold this Akshaya Tritiya to ride the recent momentum in gold prices but resist from all-out buying. Globally, gold has found some support at $1,200 levels, after falling to a 4-year low of $1130, he said. The spectre of inflation could again rise if oil prices continue their gains, which may benefit gold prices, he added.
Crude price have risen around 17 per cent since the beginning of this month on concerns over a dip in US output. But they remain significantly lower than June last year’s level of $115.
The timing of the US rate hike would also be crucial for gold prices, Mr Vaid said. Global gold prices, which are denominated in dollar, remain sensitive to US monetary policy. Since gold does not pay any interest, higher interest rates in the US could trigger a selloff in gold. A Fed rate hike is also expected to boost the dollar, which increases the holding cost of bullion. (With Agency Inputs)

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