Monday, 18th July 2005 (2698 views)

The start of the festival season in a few months time is expected to drive up India's sluggish demand for gold.

Recently demand in the country has dropped, especially at this time of year when many farmers, who account for two-thirds of retail gold purchases, are sowing winter crops.

And wedding-related buying has been down due to a seasonal lack of marriages.

"Nothing is happening now. We are literally sitting idle," a bullion dealer in Madras, a leading market for gold and silver, told Reuters.

Spot gold is trading at about $422 an ounce, down from $440 some three weeks ago and daily gold demand has been cut to about a fifth its usually level in most places.

But India, with its 300,000 gold jewellery outlets and some three million goldsmiths, is gearing up for the festival season which starts in mid-August.

The chairman of Delhi-based PP Jewellers, Kamal Gupta, says demand should pick up in about a month with the series of religious festivals, culminating in Diwali in November, the Hindu festival of lights.

Many traders feel demand should peak around this time when thousands of people buy the yellow metal, which is considered auspicious.

In total, gifts such as jewellery and coins account for 85 per cent of Indian gold purchases.

 

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