A recent spurt in gold prices seems to have dampened the zeal of India-based gold consumers as experts have expressed concern over a significant drop in gold saleĀ on Akshaya Tithiya, a day considered to be auspicious to buy gold in India.

Gold prices are on an upward rally nearing its lifetime high of USD 1240 per ounce. The spot gold in New York market stood at USD 1208 per ounce witnessing a steep rise in the past one month.

Considering this, experts in the Indian gold market are skeptical about a growth in the gold sale this year. Expressing concern over the sale on Akshaya Trithiya, Suresh Hundia, President, Bombay Bullion Association mentioned that there would be a huge fall in the demand owing to the high gold prices. I believe that the demand for gold on Akshaya Trithiya will fall to as low as around 5% of what it was a year back. Prices are so high that discourages buyers to buy even a small amount of gold. It is difficult to say how much the sale will be but it would be difficult to sell even one tonne of gold on the auspicious day if the prices continue the upward rally, Hundia told CommodityOnline.

When asked if the availability of alternative investment instruments in gold is keeping the physical demand dry, Hundia mentioned that even in the ETFs demand is very low. The prices have become close to their historical highs. So there is only a little physical demand for gold, he said adding that usually gold coins and jewellery both are equally preferred by the gold buyers for the Akshaya Trithiya festival.

However, other gold jewellery makers have differed the view by saying that the gold purchases may not be affected that badly as it is feared. An Ahmedabad-based jewellery retailer, Manoj Soni of AB Jewels informed that there will be some impact of high prices on demand but the day will surely see increased buying compare to other days of the week. The demand will surely be high on Akshay Trithiya compare to other week days. We have experienced a trend in past years that in time of high gold prices, people postpone buying gold on the day of Akshay Trithiya, which results in a weak selling during other week days prior to Akshay Trithiya. So, we see increased delivery and fresh sale happening on the auspicious day. But averaging the sale with other week days, it would show a stable sale even on the special day like Akshay Trithiya.

According to Indian history and mythology, Akshaya Tritiya festival is one of the two most auspicious days of the year to buy the yellow metal, as Hindus believe they can get lasting prosperity by buying precious metals on the day. The other festival is Dhanteras in November.

On the Indian commodity bourses gold prices hit Rs.17956 per 10 grams for MCX June contract. Meanwhile, in the international market gold prices have risen from the recent lows of USD 1123.90 per ounce to USD 1212.80 per ounce in past one month.