Indian Bullion Traders Foresee 25% Dip in Gold Demand

SEATTLE (Scrap Monster): Bullion traders in the country expect gold demand to decline by up to 25% in February over the prior month. The anticipated fall in gold demand is mainly on account of surge in domestic gold prices. Incidentally, gold prices in the country are at all-time high of around INR 42,000 per 10 grams.

The gold demand has fallen to such a level that the bullion traders are willing to offer the yellow metal at a discount of $2-3 per ounce. Meantime, the global uncertainties on account of coronavirus breakout in China are likely to drive gold prices higher.

According to Prithviraj Kothari, president of India Bullion & Jewellers Association noted that high gold prices have impacted demand. As per prediction by All India Gem & Jewellery Domestic Council, the price of gold may likely touch INR 44,000 per 10 grams by mid-March this year, if the threat of coronavirus is not contained.

Industry participants noted that the closing down of manufacturing activity in certain parts of China will impact worldwide supply. This in turn may affect global stock markets and lend support to safe-haven gold purchases. Also, the high returns delivered by gold during the past one year when matched with other assets, are likely to trigger investment demand.