Demand-price factor worries gold traders

With the demand for the yellow metal slumping by nearly 40 per cent in the last three months,gold traders and dealers who are finding the going extremely tough are desperately searching for new strategies to push up sales. As Akshaya Tritiya a period when people normally buy gold is fast approaching,gold traders and dealers are hoping that sales will pick up,but volatile prices are keeping buyers on the tenterhooks. The demand has been 30-40 per cent lower in the first quarter of the current calendar year 2009, said Ajay Mitra,managing director,World Gold Council India. Even during the peak season of December 2008 and mid-March 2009,consumers had postponed their purchases because of high prices. I am hopeful that the industry will witness a boost in sales, Mitra said.

This is after a major fall in gold imports last year from 748 tonnes in 2007-08 to 458 tonnes in 2008-09,Bombay Bullion Association president Suresh Hundia said. Trade experts feel that with the softening gold prices recently,the jewellery business will pick up. In fact,gold prices had come down to the Rs 14,100-level last week before rising to Rs 14,410 on Wednesday from the peak of Rs 16,040 per 10 grams on February 20. However,gold prices are still higher by around Rs 1,600,or 11 per cent,when compared to the same time last year.

Said Hundia,Last year,during Akshaya Tritiya,traders had seen sales of around 6-7 tonnes of gold coins. We are expecting about 10-12 per cent rise in coin sales till the end of the April. But this optimism is unlikely to sustain if the prices dont fall further.

This year our strategies are going to be different. Apart from metros,we are also targeting Tier-II and Tier-III cities, he said.