In­dia's gold de­mand could hit 950 tonnes as prices fall

The Pak Banker - - INTERNATIONAL BUSINESS/SPORTS -

In­dia's gold de­mand might reach 950 tonnes this year as lower prices spur buy­ing dur­ing the peak fes­ti­val sea­son and for wed­dings, the world's big­gest gold re­finer, Val­cambi, said.

Stronger de­mand in the world's sec­ond-big­gest gold con­sumer could sup­port global prices, which re­bounded this week af­ter hit­ting a 5-1/2 year low un­der $1,100 an ounce in July. Val­cambi Chief Ex­ec­u­tive Michael Me­saric said gold de­mand would be strong this year. "It could be be­tween 900 tonnes to 950 tonnes," he said on the side­lines of the In­ter­na­tional Gold Con­ven­tion in the city of Panaji in Goa state. De­mand for gold jew­ellery is usu­ally ro­bust in the fi­nal quar­ter as In­dia cel­e­brates fes­ti­vals such as Di­wali and Dussehra, when buy­ing the me­tal is con­sid­ered aus­pi­cious. "All this should boost de­mand," said Alis­tair He­witt, the World Gold Coun­cil's (WGC) mar­ket in­tel­li­gence di­rec­tor.

In the first half of 2015, In­dian de­mand fell 7 per­cent from a year ear­lier to 346.2 tonnes. But gold prices in In­dia have risen more than 11 per­cent since hit­ting their low­est in four years in late July. In­dus­try of­fi­cials say In­dian de­mand is de­ter­mined more by per­cep­tions about fu­ture price move­ments. "If con­sumers feel prices will go up, then they will buy dur­ing the fes­tive sea­son," said Ra­jan Venkatesh, man­ag­ing di­rec­tor, In­dia bul- lion, Sco­ti­aMo­catta, part of the Bank of Nova Sco­tia. He ex­pects In­dian gold im­ports of be­tween 850 tonnes and 900 tonnes in 2015, com­pared with 891.5 tonnes in 2014.

Another fac­tor af­fect­ing gold buy­ing will be the June-Septem­ber mon­soon rains. While some parts of the coun­try had good rain­fall the sea­son is ex­pected to be de­fi­cient over­all.

Ear­lier this month the In­dia Me­te­o­ro­log­i­cal Depart­ment (IMD) kept its forecast that rains would be 88 per­cent of the long- run av­er­age as a strength­en­ing El Nino weather pat­tern was likely to trim rain­fall in Au­gustSeptem­ber to 84 per­cent, rais­ing fears of the first drought in six years.

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