Demand is poised for a quarterly record as imports reach 300 tons to 400 tons in April-June, the World Gold Council said May 29. That’s equal to almost half last year’s total purchases.
Bullion entered a bear market in London in April as investors sold the metal in favor of riskier assets on speculation that the global economy was recovering. Gold plunged 14% in the two days through April 15, the biggest such drop since 1983, and is set to snap a 12-year bull rally.
Spot gold gained as much as 1% to $1,401.95 an ounce and was at $1,395.32 at 4:54 p.m. in Mumbai. Prices fell 6% last month, taking losses to 17% this year.
Demand in India may rebound from August because of festivals and weddings, the jewelry federation’s Soni said.
“The months of June-July are seasonally low-demand months as there are no weddings or festivals and farmers get busy with planting,” Soni said. “The volatility in prices has also kept buyers away. From August, we expect more demand from the rural areas if monsoon is good.”
The monsoon, which accounts for more than 70% of annual rainfall, is forecast to be normal this year, the India Meteorological Department said on April 26. Rains reached the southern state of Kerala on June 1, two days ahead of the date forecast by the weather bureau.
Good rains boost incomes of farmers, who invest in gold mainly as savings. Buying gold is considered auspicious in India during religious festivals and weddings. The festivals start in August and end in November, and are followed by the wedding season.
“Unless they put in physical restrictions on the amount of gold that can be imported, nothing will matter in terms of lowering the consumption,” Sabnavis said. “Controlling household investment is a major challenge. Because every time the price falls they are going to buy gold and that is going to put pressure on imports.”
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