India's Festive Gold Boom
October marks the peak of India's annual gold-buying cycle...
OCTOBER is the month of religious festival celebrations across India, reports Commodity Online from Mumbai, and the hot commodity – as always – is gold.
Despite the skyrocketing price of the yellow metal, gold demand is strong amid the religious festivals of India this October. And in 2009, banks are in the forefront, promoting the sale of Gold Bars and Gold Coins in India.
"Many banks in India have started major marketing campaigns to sell Gold Coins and bars," says Sanjeev Mehta, a bullion dealer in Mumbai.
"People in India are buying more Gold Bars and coins, as well as buying gold in the form of jewelry, which are no longer considered the best investment option."
He says gold jewelry items always come with extra 25% work duties and thus are costlier than coins and bars.
"Gold Coins and bars are always non-perishable and more solid investment options than gold jewelry items. That is why banks are promoting Gold Investment items like coins and bars these days."
HDFC Bank, one of the major banks, has unleashed a gold marketing campaign to meet festival demand this week. The bank is offering up to 2.5% discount on bars of 2.5 grams and 5 grams, plus up to 4% discount on bars of 8 grams and more.
But with the festivals of Pushyanakshtra, Dhanteras and Diwali only just round the corner, jewelers in India have also started reeling out their products to beat this new competition from the banks and other big brands.
In fact, jewelers have started selling imported silver and Gold Coins in a bid to compete directly with the Gold Investment markets being created by the banks. Certain jewelers are even offering their Gold Coins at lower prices than the banks.
Eyeing the big Gold Coin pie, jewelers in India's commercial capital Mumbai and Gujarat's big city Ahmedabad have imported Swiss-made coins for this festival season.
Imported coin sales are up 20% this year, local reports suggest. The world's biggest importer of the yellow metal, India accounts for more than one fifth of global demand for gold jewelry fabrication.
Gold Investment demand now accounts for 30% of India's gold sales, and is growing faster than the jewelry segment in India now.
Gold Coins and bars are better form of investment because one can save on wastage and making charges.
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