Tags: gold | demand | India | festival

WSJ: Gold Demand From India Is on the Rise

Wednesday, 27 Aug 2014 08:10 AM

By Dan Weil

While gold has slid 6.8 percent from its March 14 high of $1,382.92, there may be hope on the horizon — in the form of strengthening demand from India.

Buying in India is starting to perk up ahead of a Hindu religious festival this week, The Wall Street Journal reports. India is the world's second-largest gold purchaser after China.

The premium that Indian consumers pay above global market prices for the precious metal has advanced to $10 to $13 a troy ounce from zero in July, according to the paper.

Editor’s Note:
New Warning - Stocks on Verge of Major Collapse

Gold premiums in India have fluctuated mainly due to uncertainty over policies, elections and monsoon rains. The monsoon plays a large role in gold purchases since the majority of India's gold demand comes from rural areas.

"Demand is picking up every day. Festival season sales have started," Rahul Gupta, managing director of P.P. Jewellers, a large Indian jewelry chain, tells The Journal.

The annual birthday celebration for Ganesha, the god of wisdom, comes Friday. And Diwali, the Hindu festival of lights, is Oct. 23. Indians buy gold for these events.

Gold imports will likely recover to the 70 metric tons recorded in June next month from 40 metric tons this month, Prithviraj Kothari, vice president of the Indian Bullion and Jewellers Association, tells The Journal.

"Everybody was fearing that a bad monsoon will hit the festival demand. Fortunately, the monsoon has picked up and it is not so bad," Kothari notes.

December gold futures traded at $1,287 Wednesday morning on the Comex, up $1.80 from Tuesday, after dropping to a two-month low last week.

"Gold may be picking up a little bit of bargain-hunting interest," James Moore, an analyst at FastMarkets in London, tells Bloomberg.  The military conflicts in Ukraine and the Middle East "are helping keep gold underpinned."

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

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