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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