Gold Silver Reports — STUBBORN GOLD REFUSES TO BUDGE FROM Rs 32,000-MARK — Demand for gold has risen 20% in August from the earlier three months, helped by strong demand from southern states. A good monsoon and several wedding dates for the rest of the year are likely to sustain the demand in the next few months, said analysts.
“Gold demand had slowed down in May-July for a number of reasons, including the 42-day-long strike. But we are seeing a surge in demand across India as there is a general feeling among consumers that price isn’t going to drop immediately . The yellow metal is trading in the range of ` 31,000-32,000 per 10 gm for more than a month now and not showing much volatility,“ said Sreedhar GV , chairman, All India Gem & Jewellery Trade Federation.
Indian farmers buy a lot of gold, and a good monsoon therefore is crucial for the offtake of the metal. Farmers traditionally divert a percentage of their crop earnings into the precious metal which is treated as an important asset class and can be liquidated easily during distress. Rural India buys nearly 60% of the total gold which has been pegged at 750-850 tonnes in 2016 by the World Gold Council.
“We cater to a completely different category of customers who generally cannot afford heavy gold jewellery. Therefore, good monsoon is extremely important for our business. We are already seeing gold offtake picking up, and will gather further momentum from Onam which is in the first week of September,“ said Keyur Shah, CEO of Kerala-based Muthoot Pappachan’s precious Pappachan’s precious metals division.
The number of wedding days too are higher in the second half of FY17 than FY16.
“This is a positive for gold trade. The wedding season that has started in south India has boosted demand. High price is a deterrent but consumers feel that gold prices aren’t likely to fall immediately .So, they have started buying gold,“ said Joy Alukkas, chairman of Joyalukkas, a retail chain. Although demand is picking up, bullion movement has not shown much activity . Gold is still being available at a discount of $25 per ounce. — Neal Bhai Reports