Gold sales in festival week may jump 40%

Gold sales in festival week may jump 40%

Mumbai: India’s gold sales during the biggest festival week may rise by 40% from a year ago as consumers may pick up the metal in anticipation of further gains from the current, near-record levels, a senior World Gold Council official said on Thursday.

India, the world’s largest gold consumer, celebrates Dhanteras, the biggest gold buying festival on 3 November and Diwali, the most widely-celebrated festival on 5 November, when customers typically buy gold and other precious metals as a harbinger of prosperity.

“It’s now an economical decision. The urge among consumers is to capture gold now than later as prices have continuously rallied upwards," Ajay Mitra, managing director of the World Gold Council India and the west Asia told Reuters in an interview.

Gold on the Multi Commodity Exchange (MCX) was trading at Rs19,446 per 10 grams on Thursday, up 22% on year. The contract had struck an all-time of Rs20,028 on 14 October.

“So far demand has been consistently strong, even the period of Shradh did not take away sheen of gold," said Mitra, referring to the inauspicious period, when Indians pay homage to ancestors and refrain from auspicious purchases or activities.

Mitra expects imports to breach 2007’s record of 770 tonnes and rising to as much as 800 tonnes in 2010. He also expects the buying momentum to continue in 2011.

However, stocks of the yellow metal with jewellers have depleted because of strong demand, which could push premiums higher, Mitra said.

Banks, and jewellery shops, which are decorated with marigolds for the festival, are typically open till late evening on Dhanteras and Diwali day, when establishments witness highest footfall.

Gold is one of the regulated sectors in India and the central government has allowed 23 state-run and private banks to trade in bullion at the wholesale and retail levels. Jewellers also sell coins and bars through retail outlets.