Author: Paul Ploumis16 Jun 2014 Last updated at 09:14:01 GMT
NEW DELHI (Scrap Monster): The All India Gem and Jewellery Trade Federation (GJF) noted that weaker-than-expected monsoon in the country may likely curb rural demand for gold and silver in the country. The Federation also observed that rising gold prices have forced many a customer defer their gold purchases.
According to Haresh Soni, Chairman, GJF, people traded gold last year, making quick gains as prices climbed up significantly higher, offering better returns than equity markets. Conversely, people are not interested to buy too much gold this year as Indian equity market is witnessing a bull run following the election of Modi-led government at the Centre.
Of late, gold and silver prices have started moving higher following the rising violence in Iraq and escalating tension between Ukraine and Russia. Silver too had a good run up.
However, unless there is some major global crisis, there are very little chances of gold appreciating further from current levels, Haresh Soni added.
The monsoon rainfall in the country so far this year has been below estimates. GJF believes that poor monsoon is a matter of serious concern as it will pull down the rural gold demand in the country. Incidentally, 60% of the country’s gold purchases are centered on rural pockets. Rainfall below estimates could force farmers not to divulge into fresh gold purchases. Moreover, it could lead to selling pressure in market as farmers try to sell off their gold assets for livelihood.