(Minews) - Gold purchases in India started slowly on Tuesday, a festival day, despite a fall in local prices, as hard times in rural areas have hit demand and many buyers are holding back because they expect prices to fall even further.
Indians are the world's biggest consumers of bullion and Akshay Tritiya celebrated on Tuesday is usually one of the busiest gold-buying festivals along with Diwali and Dhanteras.
Gold imports more than doubled in March to 125 tonnes from 60 tonnes a year before as traders anticipated healthy demand.
Those hopes looked misplaced early in the day, with most salesmen at shops in Mumbai's Zaveri Bazaar hanging around talking to each other rather than trying to agree prices with would-be customers.
"I have sold just five gold coins so far but I expect sales to improve by the evening. Footfall was much higher last year compared to this year," said Vrishank Jain, third-generation owner of Umedmal Tilokchand Zaveri at the bazaar.
Despite the poor demand, traders were not offering much in the way of discounts.
However, gold prices in Mumbai were trading at a premium of just $1.5 an ounce over the international market on Tuesday, down from $2-$3 a week ago.
Bullion on the international market was quoted at around $1,197 an ounce, with investors keeping a close eye on festival-time demand in India to gauge whether it might go above the key $1,200 level.
Lower premiums failed to entice housewife Surekha Jain.
"I'm buying a small mangalsutra because I don't have one. I'm not making any special purchases for Akshay Tritiya," said Jain, dressed in a green suit.
Others were being just as careful.
"I am selling my old jewellery to buy new ones for my daughter's wedding in May," said Shakuntala Devi, exchanging traditional old ornaments wrapped in a cotton bag.
Nearly 60 percent of India's gold demand comes from rural areas but they have been hit by unseasonable rain and lower commodity prices. As a result, demand risks falling for a second straight year in 2015.
"Gold demand has improved this week after remaining weak since the start of the month. However, the rains have dented rural demand," said Narendra Singh, who owns Kiran Jewellers in Jaipur.
