By Anil Mathews (ScrapMonster Author)
November 03, 2015 07:41:38 AM
MUMBAI (Scrap Monster): The local dealers reported sudden rise in gold demand in the country, ahead of upcoming Diwali festival. The gold sales that had remained dull until now has shown signs of pickup. The recent fall in gold prices has led to increased buying, noted traders. Incidentally, gold prices had fallen to new four-week lows on Monday.
The Indian gold which was trading at a high discount of $10 per Oz when compared with London spot gold price on Wednesday has suddenly dropped to $2-$2.50 per Oz during the start of this week. Meantime, the discounts in Mumbai were heard at $3-$4 per Oz. However, dealers expect the discounts to move to premium by the end of this week, as demand is expected to remain strong ahead of the Hindu festive season. The premiums are expected to shoot up during Diwali, a festival closely associated with gold buying.
Meantime, the quarterly report by GFMS indicates that demand for gold surged higher significantly during the September quarter. Gold retail investment hit the highest levels since Q4 2013. Jewellery consumption increased to 193 tonne, the highest since Q1 2011. The increased investment and jewellery demand resulted in increased gold imports during the quarter. The official gold imports by the country went higher by 23% to 263 tonnes during the quarter. Sales volume of gold remained strong in August.
According to traders, gold sales witnessed sharp decline during September to October this year, mainly on account of lack of positive triggers. The retails sale of gold is feared to have fallen by at least 25% to 30% year-on-year during this period. The recently released customs data indicate that gold imports declined by almost 17% month-on-month during October this year. However, the wedding and festival season which runs until December may lift the demand for gold, they hoped. Traditionally, gold sales remain buoyant in India during the last quarter of every year.