Gold trade turns optimistic in India; Festive demand likely to ignite premiums

NEW DELHI (Scrap Monster): The festive season demand has lifted gold imports in India. The gold prices which have remained range-bound in recent weeks are likely to pick up with the advent of festive season in the country. The increased gold demand is expected to add to gold premiums. Gold traders foresee further rise in gold premiums in India.

According to Bachhraj Bamalwa, Director, All India Gems and Jewellery Trade Federation (GJF), the manufacturers’ demand has shown significant growth during this week. The gold intake has increased with manufacturers stocking up to meet increased demand during festive and marriage season gold purchase. The consumer demand too is expected to pick up in the next one or two weeks, Bamalwa noted.

The import figures suggest that increased quantity of gold has entered the country during recent months. The cumulative gold imports by India during the three-month period from June to August this year has totaled 214 tonnes. The imports had declined from 97 tonnes in June ’14 to 47 tonnes in July ’14. However, the August ’14 gold imports rose to 70 tonnes. According to estimates, the gold imports are likely to rise further during September this year.

The gradual rise in gold premiums in India is a clear indicator of rising gold demand in the country. The gold premiums have inched up from nearly zero a fortnight earlier to nearly $10-$12 per ounce in the past few days. According to gold importers, the festive demand may drive the gold premiums to $20-$25 an ounce in the near future.

Although investment demand has not picked up in the country, jewellery segment has witnessed considerable pick-up in demand, primarily on account of falling gold prices. When compared to last August, gold prices in India were down 15.7% during end-August this year.