Tuesday , December 6 2016
Home / Business / World Gold Council says fall in gold prices to boost demand in H2 2015

World Gold Council says fall in gold prices to boost demand in H2 2015

Gold_6

Thursday, 13 August,Mumbai: India’s gold demand fell by 25% during the April-June period as bad weather conditions hit rural income, but recent fall in prices of the metal is likely to boost demand in the second half of 2015, the World Gold Council (WGC) said on Thursday.

Gold demand in the world’s second biggest consumer fell by 25 to 154.5 tonnes in the April-June quarter of 2015, from 204.9 tonnes in the year-ago period.

The decline in gold demand during the first half of 2015 was only seven per cent at 346.2 tonnes as compared with 372 tonnes in same period of the last year.

Gold imports also fell slightly to 205 tonnes in the second quarter of this year from 206.2 tonnes in the year-ago period. The country imports about 800-1000 tonne of gold per year.

However, WGC is optimistic about revival of demand during July-December period of this year.

“Our expectation though for the rest of the year is that demand will be robust, for a number of reasons. The upcoming wedding and festival season in India suggests healthy prospects for the jewellery market,” WGC India Managing Director, India, Somasundaram PR told PTI.

He said that there has been a “positive uptick” in demand in the last few weeks as Indian consumers are taking advantage of the softening in the gold price.

After a relatively subdued demand in the first half of the year, WGC in its report said: “There are reasons for cautious optimism for the remainder of the year. Importantly, from the perspective of consumers in price-sensitive markets, falls in the gold price can be a strong buy signal.” Lower prices in markets across Asia and the Middle East often trigger purchases and interest has already been reported across a number of these, it said.

“The onset of the festival and wedding season in India in Q4 suggests healthy prospects for jewellery demand for the remainder of the year, with the caveat that this assumes normal monsoon rainfall. And there are tentative signs that the recent drop in gold prices has lifted appetite for gold in both China and India, with interest having picked up a little following the price fall,” it added.

With Diwali heralding the onset of the Q4 wedding season in mid-November, the prospects for H2 are supportive particularly with the local gold price having dropped substantially in recent weeks.

A risk to this scenario is the monsoon rainfall, which is projected by the meteorological department to be below normal for the second consecutive year, it said.

Citing reasons for fall in gold demand in the second quarter of this year, the WGC said, “Extreme weather patterns overshadowed second quarter demand and had a direct impact on incomes among the all-important rural population (who account for more than half of Indian gold demand).”

PTI