Mumbai: Gold demand in India, the world’s biggest consumer, rose sharply on Friday despite a record high price as jewellers and investors scaled up purchases expecting prices to climb further during the festive season.
India celebrates Ganesh festival next week, which will be followed by Dussehra in October and Diwali in November. Buying gold during festivals is considered auspicious in the country.
Spot gold price in India hit a record high of Rs.32,558 per 10 grams on Friday, compared to previous session’s close of Rs.32,173.
“Buyers were waiting for a correction in prices for a long period. Now they think the correction is unlikely as the US Federal Reserve announced stimulus,” said a Mumbai based dealer with a state-run bank importing the yellow metal.
“Some buyers even think price may cross Rs.35,000.”
Spot gold overseas rose to a six-month high on Friday, extending the previous session’s 2% gain, after the Federal Reserve launched an aggressive economic stimulus program that could add to the risk of inflation and strengthen bullion’s appeal.
“Jewellers and jewellery exporters were keeping lower inventory. They were postponing purchases, hoping prices will drop from record level,” said a Mumbai based dealer with a private bank.
“Now jewellers are buying at record high price since festival season is just around the corner. They can’t wait further.”
Investment demand, which plunged 51% in the June quarter to 56.5 tonnes, was also improving due to the price rally, dealers said.
The most-traded gold for October delivery was 0.2% lower at Rs.32,261 per 10 grams, after hitting a record high of Rs.32,421 late on Thursday.
A rise in rupee, which determines the landed cost of dollar quoted metal, weighed on sentiments, dealers said. Reuters