Gold prices near record highs could dampen demand in India during the peak  festive  season and lead to the lowest  buying  volumes in three years, the World Gold Council (WGC) said on Tuesday.  

 Gold prices near record highs could dampen demand in India during the peak  festive  season and lead to the lowest  buying  volumes in three years, the World Gold Council (WGC) said on Tuesday. 

  India is the  world’s second-biggest  gold  consumer  and  reduced gold  purchases could limit  global  price increases. Lower gold import  demand  could also help  reduce India’s  trade deficit and support the rupee.

  Somasundaram PR, regional general manager of WGC’s India operations, said higher  prices in the December quarter,  traditionally  the highest sales of the year, could  reduce buying.  Gold demand in India  typically surges  towards the end of the year,  coinciding  with the traditional wedding season and major  festivals,  including Diwali and Dusherra, when  buying  gold  is considered auspicious. 

  Domestic  gold prices jumped this week to  Rs  61,396  per 10 grams,  close to  the all-time high of  Rs  61,845  reached  earlier this year. Last year, prices in the December quarter were nearly 20% lower than this year.

  Somasundaram said in  the December quarter, demand is expected to be lower than last  year’s  276.3  mt.  

 “Currently, price is  an important influencing factor.  If  prices come down significantly before  Diwali, the  whole  situation could change,” he said. Diwali will be celebrated in mid-November. 

  India’s  gold consumption in the July-September quarter rose 10% to 210.2  tonnes on improved investment  and  jewelry  demand  due to a correction in  domestic  prices, he  claimed.  

Source www.indianexpress.com

 From January to September, gold demand  decreased  by 3.3% to 481.2  tons due to  stagnant  demand in the first  half of the year.  

 In 2023, demand could fall to around 700  tonnes, a three-year low,  from 774.1  tonnes  a year  ago. Rising  gold prices have  prompted  some  sellers  to sell  old  jewelry  and coins,  according  to  WGC data, causing  scrap  metal stocks to rise  37% from  last  year  to 91.6  tonnes  in the first nine  months of  the  year. 

  Somasundaram said the  trend  will  continue in the December quarter if prices remain  at  current  levels. 

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