In the middle of the greatest gold sell-off in recent years, Indian retailers are betting that business will soon be booming. A spate of auspicious dates for weddings in the last week of April heralds the spring wedding season—when Indian traditionally buy gold in the form jewelry and coins—that lasts until early June. According to the Press Trust of India, retailers expect gold-related sales to rise by as much as 50% over the same period last year.
But consumers are still cautious and there are reserves to handle the demand. With wedding dates still a week away, buyers are waiting for prices to stablize or drop further before heading into shops. Jewelers are optimistic that a surge will come, spurred on by weddings and boosted by Akshaya Tritiya, an auspicious day for starting new ventures and buying gold that falls on May 13 this year.
Sales have been sluggish over the past few months for a number of reasons. One is Holi, a Hindu festival that this year fell on March 27. Indians traditionally do not buy gold around the festival. Another is the lack of weddings. There were few astrologically ordained moments for couples hoping to tie the knot in February and March. The government also did its best to constrict demand, raising duties on gold by 50% in January to help close the gap on its account deficit, which hit a record high of 6.7% of GDP in the last quarter of 2012 thanks to huge bills for oil and gold.
The cumulative effect is that India’s gold imports by weight were down 24% in the first quarter of this year compared to the same period last month, according to the Bombay Bullion Association, a trade body. April will probably see a similar contraction. Traders restocked in December, and there was plenty of activity in January as they rushed to beat the duty hike. Analysts don’t expect another restocking until June. That means there is plenty of gold in India so any spike in demand over the coming weeks is unlikely to drive prices higher internationally.