BOMBAY | Monday
GOLD demand in India, the world’s largest consumer, is likely to rise from the next week due to more buying for marriages, traders said on Monday.
Gold imports would increase in the near term to meet a rise in local demand, they said, but did not provide any figures.
”Hindu marriages will peak in May, mainly in the northern areas,” said Nayan Pansare, a senior official at trading firm Inter Gold, adding that purchases would begin from next week.
India imports nearly 600 tons of gold each year to meet its annual demand of about 855 tons.
Demand for the metal in India rises during the Hindu wedding season, which runs from December to May with intermittent lulls that are considered inauspicious.
Gold jewellery is an essential part of a bride’s dowry, especially in rural India, as parents believe it gives their daughters some financial security.
Traders said retail sales would pick up further if prices fell to 57 500 rupees per bar of 116,64 grams.
Domestic sales fell in the past month due to a sharp rise in local prices.
The local price of a gold bar rose to about 58 850 rupees on Monday from nearly 57 000 a month ago due to an increase in global prices to about $301 per ounce from nearly $290.
Global prices have risen in the past few weeks due to an escalation of tension between Israel and the Palestinians. Gold is traditionally a haven for jittery investors in times of trouble.
SHIFTING BUSINESS
The country’s financial hub, Bombay, could emerge as a key gold importing centre after the state government cut local duties effective from April, traders said.
The city is already an important bullion market in the country, but many traders in the city used to import the metal through other centres, where duties were lower, they said.
But the government of the western state of Maharashtra, of which Bombay is the capital, this month halved the sales tax on gold to half a percent from one percent, traders said.
Ahmedabad, in the western state of Gujarat, and Jaipur, in the northwestern state of Rajasthan, are other important gold import centres. Local duties are 0.55 percent in Ahmedabad and 1,1% in Jaipur, traders said.
Gold prices in Maharashtra may fall marginally due to the duty cut, traders said. – Reuters