Weak monsoon forecast is also likely to affect rural demand and hamper overall sales.
Gold jewellery demand had touched record demand last year; this year, however, the industry is staring at a long break in the wedding season, and expects a tepid retail demand. Marriages and festivals account for nearly 80 per cent of the retail jewellery demand in India, and another major demand factor being monsoons.
"Muhurats" or auspicious periods for Hindu marriages will be rarity in the coming few months; according to industry insiders, the last marriage muhurat has been in May, and the next season will start around December, and there is a seven month gap between the two seasons.
Haresh Soni, chairman of All India Gems and Jewellery Traded Federation known as GJF said, "Jewellery demand for marriages accounts for nearly 80 per cent share in overall demand. As this year there are no clean muhurat marriages after May, it may impact on jewellery sales that can dip by 22-25 per cent."
Last year, however, demand was good.
According to World Gold Council (WGC), gold jewellery demand in India, the world's largest consumer, touched record 662.1 tonnes in 2014.
On top of the lean marriage season, weak monsoon prediction is also likely to put a spanner in jewellery sales, especially when it came to demand from the rural areas.
The India Meteorological Department (IMD) has forecast deficient rainfall for India in 2015, likely to be 88 per cent of the long period average (LPA) of 89 cm, which is the average seasonal rain (June-September) received by the country in the 50 years between 1951 and 2000.
The probability of getting below-normal/deficient rainfall is 93 per cent. Uncertainty over the kharif crop may derail the rural demand for gold jewellery.
As Haresh Soni said, "Monsoon is key factor in jewellery demand. This year, prediction of monsoon is weak which has also worried the jewellery market."
However, some jewellers are still hopeful and said that demand likely to accelerate after August if there is a good monsoon.
"It is fact that demand is dull at present, but rural demand and jewellery buying for marriages will likely to start after August as farmers have set financial provisions to buy jewellery and weak monsoon may not affect market much," said Manoj Soni of AB Jewels.
If gold import trends so far are anything to go by, India's domestic demand for the yellow metal might decline in the April-June quarter, after seeing a 15 per cent increase in the three months ended March.
Thanks to estimated gold imports of only around 60 tonnes in May, the total for the current quarter is expected to fall below 200 tonnes, for the first time in five quarters.
On the other side, experts are expecting fall in demand but this will not impact on price.
As D N Mukherjee senior director, corporates, India Ratings & Research, "If the US continues to delay the interest rate hike, while major economies such as Japan and the Eurozone continue with their unconventional monetary policy (UMP), the price of gold could creep up"
He also added that there was enough gold in the system that could cater to domestic demand even if imports went down. Gold prices corrected by around 38 per cent at end-FY15 after peaking to $1,922 per ounce in September 2011.