Gold Demand Surges in India Amid Akshaya Tritiya Celebrations

This week marked a notable shift in India’s gold market as retail demand picked up significantly, driven by the festivities of Akshaya Tritiya. As the world’s second-largest consumer of gold, India saw a revival in purchases following a sharp correction in prices from last week’s all-time highs. Dealers reported a surprising transition from discounts to premiums, reflecting a growing consumer interest.

Rising Premiums Indicate Increased Demand

At the start of the week, Indian gold dealers were offering discounts of up to $24 per ounce compared to official domestic prices, which already included taxes. However, by week’s end, this trend flipped, and premiums rose to $3 per ounce. Just a week prior, the same dealers were offering discounts as steep as $80.

• Key Insights:
  • Premiums shifted from discounts to a $3 premium.
  • Last week, premiums were as high as $80.

A dealer from Mumbai highlighted the influence of Akshaya Tritiya, stating, "The festival has significantly boosted retail demand, especially as prices have corrected." This festival, celebrated on Wednesday, is crucial for gold purchases in India, second only to Dhanteras.

Price Corrections and Consumer Behavior

As of now, domestic gold prices hover around 92,800 rupees (approximately $1,106.22) per 10 grams, a noticeable decline from the record high of 99,358 rupees seen last week. Many potential buyers had been hesitant to make purchases due to the volatility in gold prices. A dealer based in Chennai noted, "With prices stabilizing, we expect more consumers to return to the market in the coming weeks."

• Current Gold Prices:
  • Domestic price: 92,800 rupees per 10 grams.
  • Previous record: 99,358 rupees.

International Markets and Trends

Meanwhile, in China, premiums also fluctuated, with dealers charging between $34-$48 per ounce over the global benchmark in the early part of the week. This is a slight decrease from last week’s premiums of $44-$50. Notably, the Chinese markets are closed for the Labour Day holiday from May 1-5, which could affect future demand.

In Hong Kong, gold transactions were conducted at par or with a slight $2 premium, while in Singapore, premiums ranged from $2 to $2.50.

Global Insights on Gold Demand

The increase in gold demand correlates with a decline in prices, particularly during the festive season like Akshaya Tritiya. Brian Lan, managing director of GoldSilver Central in Singapore, noted the festival’s positive impact on buying behavior.

In Japan, the situation was less dynamic, with gold being sold at a discount of $0.25 or a premium of $0.50.

In summary, as the festive spirit of Akshaya Tritiya energized the Indian gold market, consumers showed a renewed interest, revealing a pivotal moment in the retail demand landscape. This demand surge may foreshadow a consistent trend if prices remain stable in the weeks to come.

(Note: All financial conversions are based on current exchange rates and market conditions.)