Karnataka Gold Festival to boost demand

To boost the gold sales in Karnataka, the second 'Karnataka Gold Festival' will be held from April 10 to May 20. The festival was formally launched on Thursday by actress Sridevi, who has been roped in as the event's brand ambassador.

Giving details of the festival, Sumesh Wadhera, executive publisher of The Art of Jewellery magazine, the main organiser of the gold festival, said that the festival coincides with the wedding season and 'Akshaya Tritiya' which falls on April 30. 'Akshaya Tritiya' is considered the most auspicious day for buying gold.

About 250 leading jewellers from all over Karnataka are participating in the festival. For the first time, global mining and refining giants are also participating in the festival.

Anglogold Ashanti, one of the largest gold producers and Rand Refinery of South Africa, the largest single site gold refinery and smelter complex, are co-sponsors of the festival, he added.

Global gold prices were down October to December and the sales picked up later. From January to March the prices shot up to record levels, thereby slowing down sales, said Sanjeev Agarwal, managing director, Indian subcontinent, World Gold Council.

In 2005, about 650 tonnes to 700 tonnes of new gold was added to the Indian market and another 150 tonnes of old gold was recycled, he added.

Domestic gold sales grew 21 per cent during 2005-06. The country has been seeing gold consumption growing 19 per cent for the last three years.

With volatility in gold prices, jewellers have been severely hit. "Stability in prices gives us business but during a volatile period we hesitate to do business as gold jewellery is a low margin business," said P V Mahesh, secretary of Bangalore-based The Jewellers' Association.

Growth of gold jewellery exports slowed down to 18 per cent to 20 per cent in 2005, compared to the high growth of 40 per cent to 43 per cent witnessed during 2004.

"This high growth and the subsequent dip is being attributed mainly to the sudden demand for Indian gold jewellery in new markets which was saturated later," said Agarwal.

India exports gold jewellery to West Asia, the US and a few South East Asian countries.

Agarwal said that the demand-supply gap is leading to the high gold prices and is likely to continue for a few more months.