High inflation, a depreciating rupee and 4% import duty hike on gold may have taken its toll on sales and demand this Akshaya Tritiya.

Akshaya Tritiya is considered a very auspicious day to buy gold and is the second biggest gold-buying day in the country after Dhanteras. India is the largest imported of the yellow metal.

According to Prithviraj Kothari, President of the Bombay Bullion Association, buying of physical gold had halved to 10 tonnes from 20 tonnes in the previous year.

"Sales are less than expected as prices are high and even inflation is high. So there are no savings," reports said quoting Kothari.

Apart from inflation, the depreciating of the Indian rupee has also pushed gold prices higher. A weak rupee makes gold imports more expensive. Moreover, the hike in import duty of gold bars etc. in the Union Budget 2012 has only added to customer’s woes, who have sentimental and traditional value for the metal.

In the spot trade, standard gold (purity of 99.5) prices opened at Rs.28,820, per 10 grams and ended at Rs.28,885. On the other hand, pure gold (purity of 99.9) price opened at Rs.28,950 per 10 grams and ended higher at Rs 29,025.

Amid all this, however, gold exchange traded funds seem to have benefitted as they give people the opportunity of buying gold minus the burden of storing it.

Sales volumes of gold ETFs in India have grown this year due partly to the ease of buying and selling over the Internet, reports said.

Trading in gold ETFs jumped on Tuesday, because people have started presenting the paper instruments as gifts rather than the metal itself.

ETFs' holdings of the metal are still small by comparison with India's annual consumption of about 900 tonnes of gold, but brokers and fund managers see the potential for growth of this paper gold.