Despite festive demand, gold imports likely to see a fall
The rupee fall has helped arrest the impact of a sharp correction in gold prices in the international market. International rates are down 9 per cent this year but domestic standard gold is almost at the same level.
With the festive season round the corner, demand for the precious metal is set to pick up and jewellers have started restocking gold. Most of the consumer demand is in the jewellery segment and that too light jewellery.
Consumers are price sensitive and if the price of the yellow metal remains below ~30,000 per 10 gram, it could help spur demand.
But if the rupee fall continues, gold price will go up as globally the price is almost nearing its lowest level. Shekhar Bhandari, business head, Precious Metals and Treasury, Kotak Mahindra Bank, said, “Gold price in dollar terms is one of the lowest and almost bottoming out. The US economy continues to do better leading to strengthening of the greenback. Fall in the rupee against the dollar has been significantly impacted due to the global turmoil. This will lead to higher price of gold in India.”
An international jewellery show that ended here early this week had seen a good response. Jewellers had turned up from various parts of the country. A person who attended the show said, “There has been good inquiries, which indicates that the festival mood in jewellery buying is setting in. The demand this time is more for light jewellery.”
Colin Shah, vice-chairman, Gem & Jewellery Export Promotion Council (GJEPC) said, “This year, the total volume of business generated in this event (~80 billion) has crossed a good 20 per cent over the previous year. This has come at a time when the industry needed it the most due to prevailing headwinds that the trade has seen over the past 12 months.”
Chirag Sheth, senior consultant, India & South Asia at Metal Focus, said, “Festive demand is likely to lead to higher gold sales in India. But ample inventory and cautious approach from jewellery retailers could mean lower imports compared to last year. We anticipate a 15-20 per cent drop in gold imports compared to last year.”