Mumbai, India - With gold prices at their lowest in years, Indians are flocking to shops to buy jewellery ahead of Akshaya Tritiya, a Hindu and Jain holy day believed to bring good luck and success.
"My husband got me a Burmese ruby a year ago from Yangon, but I did not make a ring out of it because gold prices were rising constantly. Now I can make my gold ring with the ruby in it," Kolkata housewife Sarbari Majumder told Al Jazeera.
The price of gold in the city has dropped by nearly $100 per 10 grams in just one week.
"I think it's a great opportunity to invest in gold now - and, being in India, gold can never go to waste," said 28-year-old financial analyst Hamsini Amritha.
"I have been saving to buy gold jewellery for some time now, but was reluctant to buy due to high prices," the Chennai-based analyst told Al Jazeera.
The latest decline in gold prices globally has been the sharpest in the past three decades. “Globally gold prices are going down mainly because people believe that the global economy is going through ‘deflation’ and holding gold is no longer necessary to hedge against inflation” says Chirag Mehta, Fund Manager, Commodities at Quantum Mutual Fund, a Mumbai based Asset Management Company.
“There are also concerns that few a European countries beginning with Cyprus and followed by Spain and Greece will be forced to sell ‘gold’ as part of their restructuring plan” explains.“The worry is that all that extra gold flooding the market will dampen demand as well as prices globally and this has triggered a sell off ” he says.
But for Indians with an indomitable fetish for gold, the falling prices have come in as a boon and they are making the most of it ahead of Akshaya Tritiya. Its the birthday of the sixth incarnation of Lord Vishnu and one of the four most important days in the Hindu calendar. This year, it falls on May 13. It is also the day on which Hindus believe the sacred River Ganges descended to Earth from Heaven.
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While many of the faithful believe spiritual and charitable work undertaken on this day will be specially blessed, many retailers and others have pushed a more worldly agenda, and gifts, particularly jewellery, are often exchanged.
As price of gold fell from its 2011 peak at more than $1,800 an ounce to about $1,400 an ounce in the past week, jewellery retailers in India started to report a surge in sales - and expect volumes to continue to rise in the coming months.
"Although in the past, retail demand for gold has been relatively unaffected by prices, we did see some drop in demand of late because prices were at all time high," said Rahul Singh, head of marketing at the Shree Ganesh Jewellery House national chain.
"It appears that consumers were waiting for gold prices to correct. In the past week alone we have seen a huge demand in all our stores across the country."
The term "Akshaya" means "infinite", or "never diminishing", and gold bought and worn on the day of Akshaya Tritiya is said to bring "never diminishing" good fortune. As such, retailers step up their marketing campaigns around the day. Shree Ganesh, for example, is one of several outlets hoping to entice customers through their doors by offering free gold coins with purchases over set amounts.
Other retailers are also bullish over demand, and said such a sales environment may last until October - the beginning of wedding season and the time of Hindu festivals including Dusshera, Durga Puja and Diwali.
"What we are seeing currently in India is unprecedented," said Rajesh Mehta, Chairman of Rajesh Exports, one of India's largest jewellery retailers
"In the past one week alone we have sold ten times what we normally sell. If the prices remain at the current levels or go down further we may see a new wave of buying," he said.
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For centuries, gold has been synonymous with social status and prestige in India and the precious metal has been an important part of social ceremonies. It is often passed on as inherited legacy.
India is believed to be the world's top buyer of gold, accounting for close to 20 percent of global demand. According to the World Gold Council, India imported 864 tonnes last year - even though gold prices were at a near unprecedented level.
"It's a question of mindset," explained Naveen Mathur, a senior commodity analyst with the Mumbai-based Angel Broking. "Irrespective of the returns based on prices, gold has always been the top priority for most Indian investors, who prefer it over anything else.
"Gold prices have had an unprecedented 12-year bull run until last week, hence investing in gold has indeed paid off for a large number of investors, many of whom had been investing in gold for a long time."
India has imported gold worth $38 billion in the fiscal ending march 2013.. And since payments for gold imports constitute a major component of India's current account deficit - consistently hovering at around 4.3 percent of GDP - it is often blamed for the steady decline of the Indian rupee against the dollar seen during the past two years. This in turn, analysts believe, has negatively impacted India's export competitiveness and its investment grading.
"The Indian government is keen to reduce gold imports and the official view has been that Indians are spending way too much precious foreign exchange to buy gold, which is adding to the deficit," said Angel Broking's Mathur.
Low financial literacy
Though this view has been disputed, India's government increased import duty on gold from four percent to six percent in January this year. Analysts says there is a good chance that duty may increase further if imports don't decline.
However, given that the price of gold had been surging until very recently, imports in April were expected to drop by a vast 25 per cent - to 53 tonnes against 71 tonnes in April 2012. This is likely to be a blip if prices continue to drop, say observers.
"We normally keep inventory for three months but if the current demand sustains, then we may have to replenish it sooner," said Shree Ganesh's Singh.
Whether or not imports return to their previous high levels, the reasons behind India's seemingly insatiable quest for gold are not hard to fathom. Afetr India's economic liberalisation began in earnest in 1991, its economy has grown at a rapid pace and millions have found themselves with much higher disposable incomes.
Some analysts say, despite rising incomes, many Indians have very little financial literacy, preferring to keep savings in bank deposits or to stockpile gold.
"Most Indians tend to have very limited vision when it comes to investment options, which is one reason why India has one of the highest domestic savings rate in the world and has the biggest privately held gold reserves," said Naveen Mathur of Angel Broking.
Awareness of investment vehicles such as Exchange Traded Funds, where investors can tap into gold prices without physically buying it themselves is also low.
Clearly, there are no definite answers to India's vexed "golden question". But chances are that gold will not lose its safe haven status here - or go out of fashion in a hurry.
Follow Deborshi Chaki on Twitter: @deborshichaki