Gold imports have also nosedived due to higher prices and an increase in the import duty
Gold may lose its glitter this Dhanteras as a sharp rise in the prices of the yellow metal has weakened its demand in the domestic market, according to experts.
"On Dhanteras, the gold sales touch around 40 tonnes every year. However, the weak demand may decrease the sales by 50 per cent this year," Surendra Mehta, National Secretary, India Bullion and Jewellers Association (IBJA) told IANS.
Gold imports have also nosedived due to higher prices and an increase in the import duty, Mehta added. India imported only 26 tonnes of gold in September this year, down from 81.71 tonnes a year ago. The imports fell 68.18 per cent, as compared to last year.
Market experts believe that gold imports have plunged to a multi-year low after the Central government increased the import duty on precious metals from 10 per cent to 12.5 per cent in the Union Budget in July this year.
"There are three types of gold demand -- wedding demand, festive season demand and regular demand. The regular demand is already low due to the liquidity crisis in the market. Besides, buyers are avoiding to invest in gold much an account of higher prices," Mehta said.
"Moreover, the gold demand will continue to remain low this festive season," he added.
Another market analyst pointed out that another reason for the weakened domestic demand last month is that prices in the global market have risen.
"The gold prices in the domestic market follow the trend in the international market. However, the recent fall in prices may improve the festive season demand," said Ajay Kedia, Director, Kedia Advisory.
However, the bullion market may lose its sheen this festive season due to the economic slowdown in the country, Kedia added.
In Mumbai, 22-carat gold was trading at Rs 39,190 per 10 gram and 24-carat gold rose to Rs 39,340 per 10 gram on Friday. Gold prices have touched Rs 40,000 level many times in the past few months.
On Monday, gold fell Rs 38 to Rs 39,295 per 10 grams on the Multi-Commodity Exchange (MCX), whereas on October 5 last year, gold prices on the MCX were at Rs 31,154.
In the international market on Monday, gold prices rose over $250 per ounce to $1,500 per ounce as compared to last year. It was trading at $1,242.20 per ounce on October 5, 2018.