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Indian Gold Demand Jumps as Jewellers Buy at Record Price
Gold demand in India, the world’s biggest consumer, rose sharply on Friday despite a record high price as jewellers and investors scaled up purchases expecting prices to climb further during the festive season.
Next week India celebrates the Ganesh festival, which will be followed by Dussehra in October and Diwali in November. Buying gold during festivals is considered auspicious in the country.
Spot gold price in India hit a record high of 32,558 Indian rupees per 10 grams on Friday, compared to previous session’s close of 32,173 rupees.
“Buyers were waiting for a correction in prices for a long period. Now they think the correction is unlikely as the U.S. Federal Reserve announced stimulus,” said a Mumbai-based dealer with a state-run bank importing the yellow metal. “Some buyers even think price may cross 35,000 rupees.”
Spot gold overseas rose to a six-month high on Friday, extending the previous session’s 2-percent gain, after the Federal Reserve launched an aggressive economic stimulus program that could add to the risk of inflation and strengthen bullion’s appeal.
“Jewellers and jewellery exporters were keeping lower inventory. They were postponing purchases, hoping prices will drop from record level,” said a Mumbai based dealer with a private bank. “Now jewellers are buying at a record high price since festival season is just around the corner. They can’t wait further.”
Investment demand, which plunged 51 percent in the June quarter to 56.5 tonnes, was also improving due to the price rally, dealers said.
The most-traded gold for October delivery was 0.2 percent lower at 32,261 rupees per 10 grams, after hitting a record high of 32,421 rupees late on Thursday.
A rise in the rupee, which determines the landed cost of dollar-quoted metal, weighed on sentiments, dealers said.