Gold Price Rises "Not Scaring Away" Buyers in India and China
DEMAND FOR gold remains robust in India and China despite the Gold Price hitting record highs, according jewelers and Gold Bullion market analysts.
One jeweler in India – the world's largest gold market – says demand "will definitely be higher than last year".
"Our sales have only gone up even though the price is going higher," says P.P. Jose, chief operating officer at Joyalukkas India, which runs 24 stores in its home country and 50 in the United Arab Emirates.
"Gold has become so strong, people are investing more in gold...[they] are very confident in gold, they are sure they can get the money back with a profit if they sell it."
"The rising middle class with higher purchasing power has started accumulating gold at all price levels," adds Sundeep Sikka, chief executive officer of Reliance Capital in Mumbai, which oversees $7 billion in assets.
The exchange rate between the Indian Rupee and the US Dollar has remained relatively stable this year – meaning India has felt the effects of the rising Dollar Gold Price.
Investors in China – the world's second largest gold market – are also undeterred by the higher Gold Price, say analysts.
"Record high prices won't scare away investors," says Shi Heqing, analyst at state-backed metals consultancy Antaike in Beijing.
Shi – who expects Chinese gold demand to rise around 20% this year – adds that Chinese investors "are likely to chase the rally and continue to Buy Gold because paper money feels increasingly worthless and they are worried about inflation."
"Gold may appeal to new classes of investors," adds a trader in Singapore, "[those] who previously avoided the market in favor of more mainstream investments like bank deposits, bonds and equities...Potentially there's a whole new market for small-sized physical Gold Bars if these investors lose faith in paper."
Total gold Demand in India was 963 tonnes in 2010 – up 66% from the year before. In China, meanwhile, gold demand was 579 tonnes – a 27% rise on 2009.
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