Author: Paul Ploumis13 Jan 2015 Last updated at 07:25:12 GMT
NEW DELHI (Scrap Monster): Fresh gold purchases have cooled off in India. As per traders scrap gold has increasingly started entering the market. Rising gold prices have resulted in 15% increase in flow of scrap gold. Consequently, gold imports into the country are likely to drop significantly during the month of January this year.
According to India Bullion and Jewellery Association (IBJA) spokesperson, almost 30 to 40% of bridal jewelry demand is being met by household gold. The rate of new jewelry purchases have slowed down. The increased availability of recycled gold has ensured sufficient supplies in market. This in turn could reduce the official gold imports by the country.
The middle class households in the country are seen offloading huge quantities of gold to take advantage of the recent hike in gold prices. The gold prices are currently trading at Rs 27,300 per 10 grams, almost 3% higher when compared with the prices of Rs 26,500 a month ago. Despite increased availability of gold, the prices inched higher on account of weakening rupee, IBJA notes.
Meantime, All India Gems and Jewellery Trade Federation (GJF) forecasts that jewellery segment will drive gold demand in the country during 2015. The demand is likely to pick up after 15th January as the wedding season is set to resume after a pause of almost a month in between.
On the other hand, investment demand is likely to remain muted as investors are unlikely to be passed on the benefit of discount offered by gold bullion dealers. Moreover, more money is likely to flow towards equity market, which has been consistently giving good returns to investors compared to gold. Not much investment seems to be coming to gold as Indian equity markets continue to outperform.
According to rough estimates, Indian households possess at least 22,000 tonnes of gold.