Monsoon, weddings to light up gold demand

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After a depressing third quarter, the World Gold Council (WGC) is betting highly on India’s gold demand in the fourth quarter of the current calendar year, following recommencement of import after two months of disruption.
WGC forecasts India’s gold demand to remain robust in the fourth quarter at around 300 tons, a rise of around 15 per cent from 260.3 tons in the same quarter of the previous year.
“October–December is the harvesting season of the kharif crop. Given that the monsoon remained favourable this year, with more agri output estimated, farmers will have additional disposable income. As an Indian, the first thing comes in our mind after food is to accumulate some gold. Based on that fact, we estimate a robust quarter for gold this year,” said Somasundaram PR, managing director, WGC India.
India’s gold demand was estimated at less than 100 tons in the July–September quarter, following restrictions imposed by the Reserve Bank of India. According the WGC, demand in the June quarter was 310 tons, taking the first-half figure in the current calendar year to 567 tons. The ministry of finance reported a total gold import figure at 354 tons in April–September
“We have 20 per cent more auspicious occasions this year than last year. Assuming that each marriage will have some gold as a pass–on asset, its demand will certainly increase,” said Somasundaram.
Further, official data show a steep decline in poverty levels in recent years. Going by the common belief, gold tops the list of priorities, even before real estate, cars and other such luxurious items; so, its demand is bound to increase, he added.
The government has raised the import duty on gold to 10 per cent and on jewellery to 15 per cent from eight per cent and 10 per cent, respectively, as it wanted to discourage fabrication work abroad. As it wished to encourage domestic jewellery manufacturing units, it raised the import duty on jewellery more than gold.
According to WGC, the government is comfortable with an annual gold import at 850 tons.
Hence, the global agency, sponsored by 23 leading gold miners, kept the gold demand forecast unchanged at 900-1,000 tons this year, as against the 864 tons India imported during last year.
Source: Business-Standard.
Source:Bullion Bulletin

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