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.
The country’s total gold demand dropped to 263.5 tonnes, down 47% year-on-year (y-o-y) in January-June, latest figures from the World Gold Council showed.
Will it glitter?Gold prices in India, the world’s top consumer of the yellow metal, breached the psychological barrier of Rs13,000 per 10g at the end of July after touching a record high of Rs13,764 on 15 July. Photograph: Jayanta Dev / Reuters
“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, that 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 prices broke below the psychological mark of Rs13,000 per 10g at the end of July after an all-time high of Rs13,764 on 15 July.
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 Hindu festival, Raksha Bandhan, heralding a series of festivals.
On Monday, HDFC Bank Ltd 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 of Rajesh Exports Ltd.
The trade is watching Rs12,000, a break above which may slow 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 gold 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% y-o-y.