Ahead of Hindu Holy Day Warnings on Gold Purchases and Discounts on Coins

Tomorrow's Akshaya Tritiya Holy day is the second biggest gold buying festival after Dhanteras (Nov.).
And major Indian newspapers are warning against plunging.

From the Business Standard:
No need to get aggressive on gold

If you want to celebrate the festival, buy only a little as token

Indians love gold. We love to wear gold jewellery. We love the fact that we can borrow money using gold as a security. We also love the fact that returns from gold can beat inflation, which very few financial instruments in India can.

So, when the price fell to a two-year low of Rs 25,790 last month, Indians were thronging jewellery stores. Due to heavy demand, some stores even ran out of jewellery and gold coins. Even our festivals are incomplete without gold. During the year, occasions such as Akshaya Tritiya, Dhanteras during Diwali and Raksha Bandhan are some days when it is considered auspicious to buy gold. Even a nominal 1 gm is enough.

So, should you buy gold on Akshaya Tritiya, which falls on May 13?

Although prices have seen a slight recovery after the sudden dip in April, there is no reason to rush and buy now, fearing prices will rise from these levels. According to experts, prices are likely to fall further and there will be plenty of opportunity to buy later in the year....MORE

From The Hindu's Business Line:

Gold stabilises, but downside risks persist

Mumbai, May 12:  

At a time when macro data flow from around the global is still mixed and countries/central bankers are attempting to bolster growth prospects through stimulus packages – enhancing liquidity, lowering interest rates, competitive currency devaluation – the downside risks to global growth have not waned.

Large-scale asset purchase by the US Fed and Bank of Japan is a case in point. Experts hope that robust financial conditions will overcome fiscal headwinds. 

Global commodity markets seem to have taken cognisance of the evolving positive sentiment. Prices posted broad-based but somewhat restrained gains on the back of better-than-expected US employment report and German factory orders and industrial production....MORE

...Precious metals

With liquidity boost and so much of uncertainty still around, prices are seen stabilising. Indeed they slowly edged higher even as the physical market has responded positively to the lower gold price environment. At the same time, outflows from ETPs have continued unabated. 

April saw a record 182 tonnes outflow, and total holdings are the lowest since October 2011. Obviously, ETP outflows remain the key downside risk to gold prices in the near-term.

On Friday, in London, all precious metals were down. Gold PM Fix was $1,427 an ounce down from the previous day’s $1,466/oz. Silver followed suit with Friday AM Fix at $23.37/oz versus previous day’s $24.07/oz. Platinum closed at $1,490/oz and palladium $702/oz. 

Physical demand in India is currently satisfactory because of seasonal factors. The hype about ‘akshaya trithiya’ is overdone to attract buyers; but consumers have generally turned wary.

Demand will turn subdued after a couple of weeks when crop planting operations commence in rural India and stay subdued until September.... 

The headline at the Economic Times speaks volumes:

WGC, India Post tie up to offer discount on gold coins

The World Gold Council is offering discounts?

Finally, here are the last three trading days of Kitco spot. Despite the bounce at exactly $1420 gold still traded down for the day on Friday:

 

From our 2007 post "EU Emission Caps, Kyoto and Three Ancient Civilizations"

...As a side note, in December 1979, as silver was making its historic run, an old Jewish trader told me he was lightening up on Ag.

When I asked why he said "I hear the Indian ladies are taking their bracelets off and they've been trading it longer than I have"....