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Lesser purchase towards gold despite festival season
Posted on: 20/Oct/2018 2:49:06 PM
In the Indian physical gold market, very little activity is observed. There is substantially lesser purchases made as compared to the usual sales done. The reason claimed is the whopping rates unlike the past 2 years.
As far as the gold demand in India is concerned, it stands next to China. Towards the year end, there is usually an uptick in gold sales due to traditional wedding season and a pile up of festivals like Dussehra and Diwali that considers gold purchase to be auspicious.
Speaking about this, the Chairman of All India Gems and Jewellery Domestic Council says this week, the demand is better than the previous week, but comparing sales this year with that of last year Dussehra, there is about 40 percent lesser sales. The rural purchases are getting hit due to the monsoon rains and depreciation of Indian Rupee, he adds.
Since 6th July 2016, gold has seen its highest at Rs 32,311 in the starting of this week.
Rural areas account to almost two-thirds of the gold demand in India. Coming on to the monsoon rain this year, there is 9 percent lesser showers that has affected crop cultivation and income generated by farmers. The jewelers have not seen the same level of Dussehra demand like last year. When the scenario prevails as this, Diwali sale will also get affected, says a jeweller based in Mumbai.
This week, about $7 price discount was imposed on domestic sales. Notably, there is 10 percent import tax towards the domestic gold rate.
In the major Asian nations, the gold demand remains moderate. In China and Hong Kong, there is stable demand for physical gold. In the coming months, the demand has to surge owing to festival season, say experts from Hong Kong.
The premiums in Hong Kong are of the range 70 cents-$1.50 while the same was earlier $1-$1.50.
According to Asian dealers, there is surge in scrap gold sales, as the sellers make best use of the gold rate appreciation, says a managing partner of a leading metal company in Hong Kong.
The premium rates in Singapore is of the range 60 cents to $1.20 while the same was earlier 80 cents-$1.20.
There were substantial dip in gold rate, particularly from Indian jewelers, says the managing director of a gold silver dealer in Singapore.
As far as Japan is concerned, the prices are in-line with the benchmark, say traders.
