Covid-19 weighs on gold sales on India’s key buying day

Most jewellers have shuttered their stores on Akshaya Tritiya to comply with lockdown curbs

A saleswoman stands next to gold necklaces at a jewellery store in Bangalore on July 5, 2019.
 India's newly re-elected government promised on July 5 an easing of foreign investment rules and more infrastructure spending in an effort to boost flagging growth rates and create jobs. India has been leap-frogged by China as the world's fastest-growing major economy, with unemployment in Asia's third-biggest economy at its highest since the 1970s.

For a second year in a row, most jewellers in India have shuttered their stores on a day considered one of the most auspicious to buy gold as the country grapples with the world’s worst health crisis.

Purchases of valuables including bullion on Akshaya Tritiya, which falls on Friday this year, are considered to bring luck and prosperity by the nation’s majority Hindu population. That tradition has been tested since last year as buyers now have to rely on either online purchases or forgo it entirely due to restrictions on stepping out and conducting business activity as coronavirus infections and deaths surge in India.

India has reported more than 300,000 daily infections for more than 20 consecutive days and one research model is predicting deaths could almost quadruple to more than a million by the end of July.

“Unfortunately about 80 per cent of the country is in a lockdown and sales will be impacted again this year,” Ashish Pethe, chairman of the All India Gem and Jewellery Domestic Council, said.

“The second wave is much more severe than last year and the mood is also very somber with almost every family touched by the virus. So no one is in the mood to buy gold.”

Gold demand will be at par with last year’s Akshaya Tritiya, when sales amounted to about 10 per cent to 15 per cent of pre-Covid-19 levels, Mr Pethe said, adding that estimates for sales on the festive date range from 30 to 40 tonnes.

Demand in the second-biggest gold consuming nation had bounced back in the first three months of 2021 from a more than two-decade low last year on softening gold prices and a sharp pick-up in economic activity. That recovery has faltered as surging infections force many states to impose lockdown-like curbs.

“With the evolving on-ground situation and individual concerns, the overall sentiment in India is not favourable with customers hesitating to step out of their homes,” Ramesh Kalyanaraman, executive director at Kalyan Jewellers India, said, adding that about 20 per cent of the Kerala-based jeweller’s stores were functioning on Friday, but with restricted timings.

Still, unlike last year, people are now more comfortable shopping online for gold, Mr Pethe said.

Unfortunately about 80 per cent of the country is in a lockdown and sales will be impacted again this year

Augmont Digi Gold, an online retailer of coins and bars, said it has sold about 30 kilograms this Akshaya Tritiya so far, compared with total sales of about 15kg on the same day last year.

“Akshaya Tritiya is supposed to be the bellwether for the wedding season as it falls in the middle of the season but the trend will be weak this year,” Mr Pethe said.

“The quarter will be hit overall but we are with the government right now as saving lives is more important.”