Gold sales on Dhanteras -- the first day of the five-day Diwali festival -- are down by about 50 per cent despite lower price as sluggish demand for bars and coins amid high inflation and weak economic outlook dimmed the sparkle of the precious metal.
Gold prices are ruling at Rs 31,400 per 10 grams in the national capital, lower than Rs 32,485 on the last Dhanteras.
"There is a drastic fall in gold demand due to weak economy and inflation," All-India Gems and Jewellery Federation Chairman Haresh Soni said on Friday.
Retail jeweller Gitajali Group's Chairman and Managing Director Mehul Choksi said overall gold sales are down by 25 per cent. "There has been a shift in buying trend. We expect diamond sales to be higher by 25 per cent from last year."
"Gold sales are down by up to 40-50 per cent because of overall high inflation. People are buying silver as a token purchase on this auspicious day despite gold prices being lower than last year," said an official of Chennai-based Nalli Jewellers.
Bombay Bullion Association's former President Suresh Hundia said overall gold sales are expected to be down by about 50 per cent compared with last Dhanteras due to lack of investment demand for coins and bars.
He said demand for bars and coins is "negligible" as investors are staying away from purchases this year because prices are higher in the domestic market than global rates.
Gold is being sold at a high premium due to supply crunch. Shipments are down as import duty has been hiked to 10 per cent from 8 per cent to address the ballooning current account deficit situation. The government has also banned imports of gold bars and coins.
Availability of bars and coins are scarce this year due to import curbs, Hundia said.
Marriage demand for jewelleries was strong. It was a 'mixed response' otherwise for from consumers on this auspicious occasion, traders said.
Sale in gold jewellery is expected to be almost at last year's level. Buying is still happening. Final sale figures are expected late night," Soni said.