Mumbai: Gold imports by India, the world’s biggest buyer of bullion, may rebound after falling for seven straight months as a religious festival and prices 15% below their record increase demand.
The Akshaya Tritiya festival on Wednesday, considered by India’s 890 million Hindus as the traditional day to buy precious metals, would spur purchases of bars and jewellery, Ajay Mitra, managing director of the producer-funded World Gold Council, said earlier
A file photograph of a woman checking out gold jewellery at a showroom on the outskirts of New Delhi
A recovery in Indian demand may help push up global prices that have declined to less than $900 (Rs36,630) an ounce for the first time in more than three months. Lenders including ICICI Bank Ltd, the nation’s second largest, and HDFC Bank Ltd say the festival accounts for at least a quarter of their annual gold sales.
“The fall in prices has come as a timely gift for Indian buyers,” said Shailendra Kumar, head of commodity research at Sharekhan Ltd in Mumbai. The brokerage, majority-owned by Citigroup Inc., is advising clients to buy gold coins and bars as “long-term bullishness is intact,” he said.
Record prices cooled demand in India and imports likely fell by 30% in the three months ended 31 March from a year earlier as consumers recycled old jewellery, gold council’s Mitra said. Purchases in April almost halved to 32 tonnes from a year earlier, according to the Bombay Bullion Association Ltd.
India imported 722 tonnes of bullion in 2007, less than the 1,000 tonnes estimated by the council at the beginning of the year.
During Akshaya Tritiya, Indians begin a new venture or buy valuables with the belief it will bring luck and prosperity. Based on the lunar calendar, the date changes every year.
“People are willing to buy using every mechanism—cash, credit and debit cards, but buy they will,” said Chitra Pandeya, who heads liabilities and payment products group at Mumbai-based HDFC Bank Ltd. “We make hay while the sun shines.”
India’s gold demand may also increase if the annual monsoon rains from June to September are sufficient for farmers to plant wheat, rice and oilseeds.
A bigger harvest leaves more money in the hands of the nation’s 235 million farmers to spend.
“A good monsoon is good for all consumer industries and gold is no exception,” he said.
Gold for immediate delivery rose $5.03, or 0.6%, to $881.43 an ounce, the fourth day of advances. Bullion had climbed to a record $1,032.70 an ounce on 17 March.
In Mumbai, standard gold closed at Rs11,655 for 10gm on Wednesday.
“It’s a dream price currently and you may not see gold at these levels again,” Sharekhan’s Kumar said.
Gold may average $906 this year, Citigroup analyst John Hill said in a report on 1 May. Prices for immediate delivery averaged $697.09 an ounce last year. BLOOMBERG
Sumit Sharma contributed to this story.