Mumbai: India’s gold demand may revive if prices fall by another 6% from current levels even as it registered a 38% fall in demand in the second quarter of 2009, the World Gold Council said.
“Any dips in the price below the stubborn Rs14,000 level would be likely to encourage consumers back to the market,” the WGC said, adding there is considerable pent-up demand.
“We expect consumers, investors and the trade to look for opportunities to buy following an exceptional period of profit-taking and de-stocking,” said Aram Shishmanian, chief executive of the World Gold Council.
Consumers and wholesalers appear to be waiting on the sidelines for more sizeable dips to provide a more attractive buying opportunity, the association of gold miners said.
The upcoming Diwali festival and wedding season should help underpin a seasonal improvement in the remainder of 2009, the WGC said.
“There has been a good recovery from the previous quarter and the outlook for the upcoming festive season looks very positive,” said Keyur Shah, associate director, WGC.
India’s gold demand had plunged by 83% to 17.7 tonnes in the first quarter.
Gold on continuous chart was held steady at Rs14,862 per 10 grams, down about 7% from its all-time high of 16,040, struck on 20 February.
India’s gold demand for the second quarter to June fell 38% to 109 tonnes as weak economic conditions and high prices continued to weigh on sentiment.
Demand for coins and bars fell 56% to 21 tonnes in April-June from 48.1 tonnes a year ago. Jewellery demand fell 31% to 88 tonnes.
Below-average rainfall in June was a further deterrent to gold demand as the rural population is heavily dependent on a good monsoon to boost their agricultural incomes, it said.
The WGC said there has been a reversal in exports, which happened in the previous quarter. India had turned into a net exporter of value-added products of gold.
India had exported 17.7 tonnes of gold in the first quarter to March.