Gold demand in India picking up ahead of the traditional wedding season

Gold demand in India is picking up ahead of the traditional wedding season but continues to remain under pressure due to high prices. MCX Gold is currently trading around Rs 27500/10 gm, more than 20% up from Rs 22,500/10gm levels in July 2011.

With the Indian consumer being strongly price elastic, Jewellers see consumers postponing purchases for the time being. But the wedding demand will remain, a jeweller said while adding that volumes have been declining. Demand from smaller town and cities have been reported to be more stronger than the metros.

High Gold prices had resulted in lower demand from India. In fact, the Bombay Bullion Association (BBA) reported that gold imports to India dropped by 56% to 125 tonnes in Q4, 2011. The association believes that unless gold prices decline from its high levels, demand from Indian consumers may fall further.

With the Indian government hiking taxes on gold and silver, its impact on consumers remain to be seen. Though most see an initial slump, many predict that it will not affect demand over the longer term. – CommodityOnline

Tags: China gold demand, India gold demand

Posted by admin on Jan 20 2012. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry