By Paul Ploumis 19 Aug 2015 Last updated at 08:01:19 GMT
NEW DELHI (Scrap Monster): The latest study report published by GFMS Thomson Reuters forecasts Indian gold demand to jump by 11% in 2015. The report states that the rupee price of gold will decline by 15% during the year, which will trigger fresh purchases of the yellow metal.
The yearly gold demand in India is likely to touch 936 tonnes in 2015, 11% higher when compared with the country’s gold demand of 842.7 tonnes during the entire year 2014. Also, during the initial seven-month period of the year from January to July this year, the country has already imported 495 tonnes. The country is likely to import around 370-380 tonnes of gold during the five-month period from August to December this year, considering the fact that scrap gold supply normally constitutes almost 70-75 tonnes in an year.
According to GFMS analysts, the study has taken crop yield as a variable to measure the relationship between monsoon and gold demand in the country. The study also analyzed the strong relationship between monsoon, crop yield and local expenditure on gold to arrive at the 11% demand forecast for gold during the current year.
The crop yields in India are highly dependent on monsoon rainfall. A better-than-expected monsoon may boost crop production, which in turn will translate itself to higher revenues for farmers and higher consumption of gold. Incidentally, rural population accounts for majority of India’s gold demand.
Meantime, the recently released ‘WGC Gold Demand Trends Q2 2015’ report also had predicted 25%-30% year-on-year rise in gold demand during second half of the year. The full year gold demand expectations were projected to range between 900 tonnes-1,000 tonnes, with strong bias towards the lower range.