India’s demand for gold has reduced to half due to its soaring prices, a top industry official has said.
“The country’s demand for gold has come down to less than one tonne per day, as compared to the normal demand of 2 tonnes due to its high price,” the Bombay Bullion Association (BBA) President Suresh Hundia told media in Mumbai.
The demand in Mumbai bullion market has also reduced to 250 kg per day as compared to the normal demand of 500 kg per day, Hundia said.
“We expect a correction in the prices of gold to Rs 18,200 to Rs 18,500 per 10 grams, after which the demand will start picking up,” he said.
Jewellers are expecting a rise in demand after the commencement of the Ganesh Chathurthi festival and forthcoming Navratri next month.
Gold retreated from its historic peak levels at the bullion market Thursday on emergence of profit selling by stockists and speculators amidst bearish global sentiment.
“Local, retail buying was virtually nil on account of the yellow metal’s steep surge,” traders said.
Standard gold (99.5 purity) was quoting at Rs 19,075 and pure gold (99.9 purity) at Rs 19,170 per 10 grams in the Mumbai bullion market last week.
In the international market, gold fluctuated near a 10-week high as concerns the economic recovery is sputtering spurred demand for the metal to protect wealth.
It has steadied near USD 1,257 an ounce as equity markets stabilised and the euro rose, encouraging investors to delve back into riskier assets.
In local markets, some retail customers preferred to sell old scraped gold jewellery at existing higher levels amid reports of a marginal fall in global markets.
Retail customers postponed their decision to buy new jewellery for the festival and marriage season at such high levels, which also kept precious metals in negative zone, gold trader Amit Jhaveri said.
Gold prices are expected to trade with a positive bias owing to slow growth in the US and worries over European debt crisis re-emerging, he said.
These factors are expected to boost demand for the yellow metal as a traditional safe-haven asset. Demand for gold is also expected to rise on the back of festive season, thereby supporting prices on the upside, Jhaveri said.
