Gold Rebounds Boosted by India Holiday Sales
Even after a two-week rally in bullion, domestic prices remain 7.4 percent lower than a year ago just as sales are set to climb for the festival and wedding season. India is the largest gold buyer after China. The All India Gems & Jewellery Trade Federation said fourth-quarter imports of the metal may jump 75 percent, which Barclays Plc said may support prices.
“The appetite for gold among physical buyers in India seems to have increased,” said Howie Lee, an investment analyst in Singapore for Phillip Futures Pte. “India’s attachment to gold is unlikely to break. This tradition has lasted for centuries. It’s a symbol of wealth or a form of investment, and the precious metal is deeply rooted in worship and culture.”
Diwali, the festival of lights celebrated by the country’s more than 800 million Hindus on Oct. 23, is considered an auspicious time for buying gold. Jewelers in India, which represented 25 percent of global bullion purchases last year, are betting demand will be rekindled by four straight quarterly declines in domestic prices, the longest slump since 2004.
Gold traded in London touched $1,183.24 an ounce on Oct. 6, the lowest this year. Prices have tumbled 28 percent in the past two years as the Federal Reserve signaled an end to stimulus measures intended to revive the U.S. economy, while inflation remained in check. Even as low prices fueled a surge in physical demand in China, the appeal of the metal as a hedge has waned for investors.
Demand in Asia has declined this year after jumping in 2013, when global prices plunged 28 percent, the most in three decades. Consumption fell 16 percent in the second quarter to 963.8 tons, the World Gold Council estimates. While China was the top buyer in 2013, demand in the three months through the end of June fell 52 percent to 192.5 tons, less than the 204.1 tons purchased in India, council data said.
The metal will extend losses into 2015 as the dollar rallies, Morgan Stanley said on Oct. 8, listing the commodity among its least-preferred metals. Average prices will decline each quarter, reaching $1,165 in the three months through September, the bank said.
Source: Bloomberg- Gold Rebounds Boosted by India Holiday Sales
