Gold demand in India has risen by 72% to account for half of world mining output...
INDIA – the world's largest market for Physical Gold Bullion – is now witnessing the highest demand for gold so far this year.
The strong rise of the Rupee and rising consumer spending have raised India's gold demand by as much as 72% in the first half of the year. A report from the World Gold Council says demand for gold in India reached an all-time high of 317 tonnes in the second quarter of 2007.
That figure is nearly double the amount sold last year and equal to half the global mined output for the same period.
The WGC report said that of this gold, only 10% to 15% was recycled from existing jewelry and other items, indicating strong demand for fresh imports.
Traders predict that if the current demand continues, the full-year consumption of in India could rise by as much as 30 per cent on year to 900 tonnes.
Gold demand typically peaks in the country during the second half amid festivals and the wedding seasons. Report said people in rural and urban areas have started stocking up the yellow metal for the festivals such as Diwali and Dusshera.
According to Suresh Hundia, president of the Bombay Bullion Association, traders expect record sales of gold this year. "Many traders and jewelers are working overtime to meet the ever-growing demand for gold," he said.
Experts meeting at a conference in Mumbai, meantime, have predicted that the global Price of Gold will be $700-$730 an ounce by the end of this year.
Participating in a gold convention organized by Foretell Business Solutions in Mumbai, metal analysts said consumers and investors worldwide are buying gold these days to protect themselves from weakening returns in other asset classes.
"I think the Gold Price will be above $700 by this year-end," Tom Pawlicki, precious metal analyst with Man Financial Global told the conference participants.
He pointed out that gold is being used as a hedge against geo-political risks thanks to the liquidity troubles in credit and equity markets across the world. But he added that the gold prices would then come down after reaching the $700 level next year.
Paul Walker, the chief executive officer of GFMS agreed with the analysis by pointing out that gold will witness sustained rally in the coming months.
"Thanks to the market turmoil, part of the money from equities and other assets will come into the gold market," Walker said.
Rajan Venkatesh, director, India bullion of Bank of Nova Scotia also expressed the same sentiments and said: "We are bullish on gold. The Gold Market is going to glitter."