Bullion in India sees no big uptick

While gold is fast regaining its appeal as a safe haven asset in the international market amidst the simmering tension between North Korea and the US, the bullion industry in India is yet to see any major pick up in investment demand for the yellow metal.

Industry participants said investors would look at gold more favourably only when the equity markets turns bearish and the long-term outlook on the yellow metal improves significantly.

“We are yet to see a pick up in investment demand for gold bar and coins. Investors may be still in a wait and watch mode as gold as an asset class has failed to fetch impressive returns over the last four years,” said Bachraj Bamalwa, director, All India Gems and Jewellery Trade Federation.

Since the beginning of July, prices of gold in the international market has surged around 6 per cent from $1,220 per ounce to $1,290 per ounce as the increasing nuclear war rhetoric between US and North Korea triggered exodus of investors to more safe haven assets like gold and US treasury bonds.

WITH PRICES of gold inching higher, Mukesh Kothari, director of Riddi Siddhi Bullion said the gold industry is not going to see any major consumption demand as well

In the domestic market, the prices of gold soared to nearly `30,000 per 10 grams from `28,500 per 10 grams during the same period. In the last oneweek, both Sensex and Nifty has corrected close to about 2.50 per cent from their recent peaks.

“This is just a small correction. We will have to see whether the weakness in the equity markets continues for an extended period of time and also whether the gold prices are able to sustain their positive bias. Investment demand in gold would gather pace in the domestic market only when the return expectations are high,” Mr Bamalwa said.

Even the gold jewellery demand has remained largely subdued during the current quarter as a significant section of consumers had advanced their purchases ahead of the implementation of the GST.