After taking a major hit when the Indian government announced demonetization of high value currency and the subsequent roll out of indirect tax reform Goods and services tax, the demand for gold once again picked up during Dhanteras festival on Tuesday, two days ahead of Diwali, the festival of lights. Many Indians believe that buying gold and silver on this day brings prosperity.
The Indian government’s recent announcement relaxing norms under the Prevention of Money Laundering Act (PMLA), combined with stable prices, also helped boost footfalls at jewelry shops during Dhanteras.
Earlier under PMLA, anybody using cash to buy jewelry above Rs 50,000 (US$ 768.11) had to furnish permanent account number, issued by the Income Tax department, or Aadhaar card, a 12-digit unique identity number issued to all Indian residents based on their biometric and demographic data. The government recently increased the limit to Rs 200,000 (US$ 3,072.43).
Traders from key markets such as Ahmedabad, Mumbai, and Bhopal reported a revival in demand after last week’s subdued buying sentiments, reports The Hindu Business Line.
However, they caution that customers are buying lesser amount of gold coins and jewellery. According to Nitin Khandelwal, chairman, All India Gems & Jewellery Trade Federation, most of the buying is taking place at less than Rs 200,000 (US$ 3,072.43) levels. He also pointed out that this year the demand for diamonds was higher, the daily added.
Meanwhile, mobile wallet company Paytm has said that its gold sales platform Paytm Gold witnessed a 12% surge on Dhanteras, with 60% from smaller cities. The company also claimed that six months after it started its gold sales platform, it has so far sold gold worth Rs 1.2 billion (US$ 18.43 million) and crossed the one-million customer mark on Dhanteras.