Gold seen crossing global ’06 sales on higher festival demand

Gold seen crossing global ’06 sales on higher festival demand

Global gold demand is set to rise with the end of summer doldrums and the current quarter may see more buying than last year as prices have been less volatile, analysts and traders say.

Growing acceptance of higher bullion prices and rapid economic growth in key consuming nations would lift gold buying, which is already on a recovery path after falling by nearly 10% last year due to volatile markets.

Spot gold traded in a wide range of more than $200 (Rs8,200) an ounce. In 2006, it hit a 26-year high of $730. But the metal has been less choppy this year, with prices ranging in a band of less than $100.

“I suspect as we move towards the latter part of the year, the buying pressure will increase in line with the fact that we are heading towards the Christmas period, the Chinese New Year," said Darren Heathcote of Investec Australia in Sydney.

World identifiable demand for gold rose about 3% to 822 tonnes in the first quarter of 2007 from the same period last year, and by more than 19% to 922 tonnes in the April-June period, according to the World Gold Council.

China’s gold demand is likely to remain robust after surging 31% in the first half of 2007. Turkey’s gold imports could set a new record this year and buying in West Asia may go up with festivals and a rise in the number of tourists.

There has been no sign of a decline in jewellery demand in the US despite the potential for an economic slowdown, but demand in Japan may slip this year due to high gold prices in the local currency, an industry official said.

“We are seeing a very significant restocking process going on in the markets, primarily for India, as we are heading to the heavy festival season," said Andy Montano, a director at bullion dealer ScotiaMocatta, part of Scotia Capital and The Bank of Nova Scotia, Toronto.

India, the world’s top gold buyer, is expected to see strong sales in the festival season from September to November with Diwali—the festival of lights. Reuters