Good Monsoon to Boost India's Gold Sales
Source: The Wall Street Journal, Swansy Afonso (8/30/10)
"We expect sales this festival period to rise by 20%. . ."
India could import as much as 400–450 tons of gold in 2010, driven largely by strong sales in Q210.
The Bombay Bullion Association estimated India imported 343t gold in 2009, down from 420t in 2008.
"Monsoon rains have been good this year, so a lot of rural investment will come in," said Ved Prakash of MMTC Ltd.
The worst monsoon in four decades hit farm incomes last year, reducing demand from rural areas,—the most significant segment of the gold market in India.
"We expect sales this festival period to rise by 20% as there is more money with people and investment will continue to be high," said S.K. Jindal of Jindal Exports Ltd.
India's festival season from September to late November or even early December in some states, is considered an auspicious time for buying as well as gifting gold. This is when most weddings take place and gifting gold is an integral part of Indian weddings.
Industry officials at the conference said higher prices may not dampen demand this year. In Mumbai, the main bullion market in the country, pure gold was quoted at 19,025 rupees ($406.5) per 10 grams Monday, just shy of an all-time high of 19,140 rupees/10 grams hit in June.
The consensus generally is that prices could to rise to over 20,000 rupees/10 grams in the next six months as uncertainty over the global economic recovery persists.
"Demand has fallen at higher prices, but not as much as expected as India has been buying at dips. People are buying as they (fear) prices will go up further," said GFMS CEO Paul Walker.