Gold is usually seen as a safe-haven when stocks are falling or when inflation is rising.
With prices of the yellow metal hovering near record highs, people are also putting off their jewellery purchases.
Along with a subdued marriage season, the orders with price open and settled on delivery day, too, are getting cancelled.
Apart from high, volatile prices, there is no gold rush yet for the safe-haven asset, crimping demand.
The rally in gold prices has been so quick that a positional investment demand has also been tepid at this level.
Market participants hope for gold price stability for demand to revive.
March is likely to be muted due to some ominous days, price volatility, and month-end tax planning by individuals.
“The prevailing geopolitical tensions and inflationary pressures are driving up the price of gold.
"As a result, there is near-term impact on gold jewellery demand in the current wedding season.
"A section of customers with adequate financial bandwidth is able to absorb the price hike and sticking to its preset budgets.
"However, a number of families with restricted budgets are tweaking their spending pattern instead of rescheduling weddings.
"The short-term dip in demand won’t be a big concern, given that long-term gold demand outlook remains robust due to the socioeconomic significance of the metal,” says M P Ahammed, chairman, Malabar Gold & Diamonds.
Apart from the wedding months of April and May, Akshaya Tritiya on May 3, too, will catalyse demand.
Experts say if price stability returns and the Russia-Ukraine offensive is resolved, demand recovery is expected to be healthy.
Chirag Sheth, principal consultant-Southeast Asia, Metal Focus, an international precious metals research and consultancy firm, says, “We have seen a pause in demand at the current high levels.
"Everything depends on how and when the war ends. If it ends soon, we see prices correcting again to a reasonable level.
"Should it prolong, prices will continue to rise and global central banks’ actions will decide the course.”
Until Holi, gold buying is unlikely to pick up since this time period is considered inauspicious.
However, demand revival after Holi will be subject to clarity on the Ukraine conflict and price stability.
Surendra Mehta, national secretary, India Bullion and Jewellers Association, said, “Usually end-March, gold demand is not a priority unless it is for a wedding.”
This month, therefore, will be mostly dry for jewellers.
The bullion-dollar question is: Will prices fall or stabilise at reasonable levels?
“Nothing can stop gold at the moment from its bullish trend. I see a range of $1,965 - 2,119 for the next six trading sessions.
If it breaks $1,966 on the lower side, it can slide further down.
"If it does not break it, gold prices will head towards $2,119,” says Mehta.
For traders taking a positional view, it is not recommended right now.
“It is best to be careful in trading with a strict stop-loss in intraday trade.
"Rising inflation, geopolitical tensions, Russian sanctions, falling rupee, and higher commodity prices, including crude oil, are fanning gold price rise,” he adds.