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Monday, 18th July 2005 (4230 views)

The start of the festival season in a few months time is expected to drive up India's sluggish demand for gold.<br/><br/>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.<br/><br/>And wedding-related buying has been down due to a seasonal lack of marriages.<br/><br/>"Nothing is happening now. We are literally sitting idle," a bullion dealer in Madras, a leading market for gold and silver, told Reuters.<br/><br/>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.<br/><br/>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.<br/><br/>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.<br/><br/>Many traders feel demand should peak around this time when thousands of people buy the yellow metal, which is considered auspicious.<br/><br/>In total, gifts such as jewellery and coins account for 85 per cent of Indian gold purchases.<br/><img alt="track" src="http://feeds.directnews.org.uk/feedtrack/dn.gif?feedid=196&itemid=15006588"/>

 

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