Mumbai: India’s gold sellers said they hoped to cover up the low sales in the first half of the year after the latest correction in gold prices, provided they stabilize around current levels.
India’s total gold demand dropped to 263.5 tonnes, down 47% on year in Jan-June, latest figures from the World Gold Council showed.
“Even though it is early days, one does see a positive impact of the recent fall in gold prices on demand,” said a spokeswoman at Reliance Retail Ltd, which sells gold jewellery under the Reliance Jewels brand.
“However, once gold prices stabilize at lower levels, one could see a significant increase in demand.”
Indian gold broke below the psychological mark of Rs13,000 per 10 grams at the end of July after an all-time high on 15 July at Rs13,764.
The downtrend continued and it slid below Rs12,000 early this month, triggering off large-scale buying by traders, and retail sales followed suit with Saturday’s major Hindu festival, Raksha Bandhan, heralding a series of festivals.
On Monday, HDFC Bank quoted spot gold at Rs11,320, down from Friday.
Consumers advanced their gold purchases believing prices may bounce back, jewellers said.
“This demand is coming not only for the festivals, but also from those who held back their purchasing earlier,” said Rajesh Mehta, chairman, Rajesh Exports Ltd.
The trade is watching Rs12,000, a break above which may slow down demand.
“It is the fall below Rs12,000 that has made gold so much more attractive,” said V. Govind Raj, vice president - retail and marketing, at Tanishq, the jewellery division of Titan Industries Ltd.
But it is not certain if the 2008 demand would exceed last year’s in the world’s biggest consuming country, an analyst said.
“The revival in demand may not cover up the first half’s poor sales fully, but the gap may be narrowed,” said Nayan Pansare, a consultant for jewellery export houses.
“I think the year may end up with a deficit in demand compared to last year, unless prices fall below Rs10,000, in which case there could be extraordinary buying.”
In 2007, India imported 773.6 tonnes of gold, up 7% on year.