Author: Paul Ploumis12 Nov 2014 Last updated at 07:09:55 GMT
NEW DELHI (Scrap Monster): The gold imports into India which are now at normal levels, could climb higher during the next year, said Sunil Kashyap, Managing Director, Bank of Scotia Mocatta.
According to him, the Indian gold demand in 2015 will be determined by two key factors- domestic gold prices and macroeconomic conditions. The gold prices are predicted to sustain its falling trend, while policy reforms are expected to boost country’s economy. Both these factors are likely to propel higher gold imports into the country, the bank noted.
The price forecasts by leading investment banks suggest that gold prices are unlikely to recover soon. Barclays bank expects the drop in gold prices to continue in first quarter of 2015. The bank forecasts gold price to average at $ 1,180 per Oz in 2015. Meantime, HSBC states that $1,131 per Oz will be a key level to watch for. UBS too cut its one-month gold price forecast to $ 1,180 per Oz. Also, Goldman Sachs sees more turbulence for gold during the next six-month period. The bank believes that as prices go lower, the demand for gold is likely to improve.
The macroeconomic conditions in India are likely to play prominent role in determining the country’s gold demand. The Indian current has managed to remain stable in a narrow range over the past few months. The inflation figures for the month of September stood at five year low of 3%. The stock markets are holding close to its record highs. Continuation of the trend would free up disposable income, a part of which should go to gold and jewelry.
India’s gold imports averaged nearly 50-60 tonnes per month until the government lifted the import duty from 2% to 10%. Further, imposition of controversial 80:20 rule resulted in sharp fall in gold imports. The imports which fell to 5 tonnes in Sep ’13 gradually picked up to 15 tonnes towards Dec ’13. The relaxation on gold import norms, allowing more banks and premier trading houses to import gold, resulted in sharp rise in imports. Over the past three months, imports have once again rebounded to normal levels.