Gold News

Indian Festivals Expected to See Jump in Numbers Buying Gold

JEWELERS in India – the world's largest gold market – are preparing for a big jump in the number of people Buying Gold jewelry during the upcoming festival season, according to a leading gold analyst as well as the country's largest jewelry maker.

"The monsoon season so far has been good," adds UBS precious metals strategist Edel Tully.

"Strong gold demand is expected for the upcoming festival season."

"When people are buying jewelry," explains Rajesh Mehta, chairman of Rajesh Exports, "their motive is investment," "Demand will go up because of the festival season and also people feel that prices may go higher."

Mehta predicts the festival season will see total Gold Bullion demand hit 250 tonnes over the three months to the end of November – a 25% jump from the same period last year.

The latest figures published by the World Gold Council estimate Indian gold demand in the second quarter of 2011 was 248.3 tonnes – up 38% on the three months to the end of June 2010.

Mehta says that Indians have continued Buying Gold despite the metal's rising price.

"In spite of the high prices, we have seen quite good demand."

The number of people Buying Gold has also not been offset by a corresponding rise in gold owners looking to cash in, Mehta says.

"Scrap sales surprisingly are not much even at these prices as investors hope prices will rise to much higher levels."

High Gold Prices have not deterred Chinese investors either, according to one China-based analyst.

"Gold's rally over the past two years and the debt worries in the West have only strengthened Chinese investors' belief that they need to own the metal as an investment asset," says Hou Xingqiang, gold analyst at Jinrui Futures, who adds that people are Buying Gold when prices fall.

"Many Chinese investors and consumers see price corrections as buying opportunities. The view that gold is an enduring store of value is firmly rooted in Chinese cultural traditions."

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