Jul. 21st - Consumers in India, the world’s biggest gold user, are boosting purchases of the metal for investment, undeterred by record prices, according to jeweler Joyalukkas India Ltd.
“Our sales have only gone up even though the price is going higher,” Chief Operating Officer P.P. Jose said in an interview from the company’s headquarters in the southern city of Kochin. “Gold has become so strong, people are investing more in gold.” Joyallukas has 24 stores in India and 50 in the UAE, he said.
Gold touched an all-time high of $1610.10 an ounce yesterday as debt woes in Europe and the U.S. spur demand for a protection of wealth. Bullion demand in India, at a record 963.1 metric tons last year, will top 1,000 tons this year, Jose said.
Demand “will definitely be higher than last year,” he said in a phone interview yesterday. People “are very confident in gold, they are sure they can get the money back with a profit if they sell it,” Jose said.
Bullion has advanced 12 percent this year, heading for an 11th annual gain, as investors sought a haven amid rising inflation and currency debasement. Spot gold rose 0.2 percent to $1,591.55 an ounce at 8:32 a.m. in Mumbai. In India, futures reached an all-time high of 23,320 rupees ($524) per 10 grams on the Multi Commodity Exchange of India Ltd. yesterday.
“Nowadays people invest in gold, because gold is stronger and as long as the European and the U.S. economy are weak, gold will become strong,” Jose said. “Many people these days have come to invest in gold, earlier they were buying ornaments for customs like marriage, or births.”
Investment demand, consisting of bars, coins and bullion- backed funds, jumped 60 percent to a record 217.4 tons last year in India, and jewelry demand advanced 69 percent to 745.7 tons, according to the producer-funded World Gold Council. It rose 8 percent to 85.6 tons in the first quarter, the council said in a report in May.
Demand for gold as an investment will keep climbing driven by growing incomes in India, Reliance Capital Asset Management Ltd. said last week.
“The rising middle class with higher purchasing power has started accumulating gold at all price levels,” Sundeep Sikka, the Mumbai-based chief executive officer of the money manager, said July 11. “Demand is likely to rise as Indians become more and more prosperous,” said Sikka, whose company operates the country’s second-biggest gold-backed fund according to Bloomberg data.