India May Gold Sales Up Massive 161% yoy - Gold Rush Continuing.

The gold rush in India, the world's biggest bullion consumer, continues unabated. Physical demand for the gold remains high despite the spike in prices, wealth management firm UBS has said in a note, adding that an indication of sales to India was a 23% jump in gold sales from the start of the year till July.

As compared to the seven months of last year, demand was rather robust, the agency has said. Physical bullion sales soared 76% in May as compared to sales in April and a thumping 161% from a year ago, UBS said in a report.

Though soaring bullion prices have been making Indians hesitant about buying the yellow metal, traders said the festival period which commences in August, will ensure that more Indians buy the precious metal during an auspicious time.

Bullion retailer Shantilal Makwana said even a slight selloff in either gold or silver ensures physical buying. ``Many small-time investors have deferred buying due to firm international and local prices. But, with prices levelling off even a slight bit, customers have started trickling in,'' he said.

The country's robust appetite for precious metals tends to pick up during the month of August, when a busy festival season kicks off with Raksha Bandhan, which is a festival celebrating the bond of protection between siblings in India. In a ceremony that involves the tying of a sacred thread by a sister on her brother's wrist, a gold pendant or ring is now a must-have. The thread is meant to symbolise the sister's love and prayers for her brother's well-being, and the brother's lifelong vow to protect her.

As retailer Makwana said: ``In most traditional households too, the sacred thread has given way to a small gold chain or bracelet. Not only does the festival ensure a massive demand for gold, many customers also buy gold jewellery or small items to gift their siblings during this time.''

India still dominates the gold jewellery market, buying 206.2 metric tonnes in the first quarter as compared to China which bought 142.9 metric tonnes.  Traders insist that India's gold imports are set to spurt sharply in August, with imports set to rise three fold.

Source : mineweb.com