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Gold imports may fall as families bank onto household gold to meet the bridal jewellery demand |
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KOLKATA: Indian families are increasingly banking on household gold to meet the bridal jewellery demand for the upcoming wedding season that kicks off from mid-January, a trend that's likely to bring down its import by 73% to 40 tonne in January, against 151 tonnes in November last year.
"Nearly 30-40% of the bridal jewellery demand is being met by household gold. Consumers are buying new jewellery, but at a slower rate," Ketan Shroff, spokesperson, India Bullion & Jewellery Association (erstwhile Bombay Bullion Association), said. It is believed that nearly 22,000 tonne of gold is locked up in Indian households.
Shroff said that huge quantities of gold were imported by nominated agencies during November in anticipation that the government will introduce some stricter import curbs. But the opposite happened as the government withdrew the 80:20 rule which tied imports to exports, that made gold easily available in the Indian market. Gold imports surged in value terms in November to $5.61 billion, pushing the trade deficit to an 18-month high.
Though availability improved in the market, prices still inched up at the retail end as rupee weakened against the dollar. "Bullion dealers may be selling gold at a discount, but consumers may not enjoy the benefit. The premium on gold has disappeared in the Indian market. Moreover, the equity market is giving good returns. So not much investment is coming to gold," Shroff added.
Jitendra Jain, owner of Jugraj Kantilal & Co, a leading gold scrap dealer in Mumbai's Zaveri Bazar said, "The scrap flow has increased by 15% since early December, because there has been an increase in gold prices as the rupee has fallen against the dollar." Currently, 10 gm of gold is available for Rs 27,300 which was around Rs 26,500 a month ago.
Household gold is mostly being sold by the middle class, but not the rich and elite. "The rich are offloading only 10% of their household and are mostly buying new gold for family weddings," Ishu Datwani, founder of Mumbai-based Anmol Jeweller said.
Incidentally, jewellery demand in India clocked a 60% rise in the July-September '14 period to 183 tonne, according to World Gold Council.
"This year, gold demand in the country will be driven by jewellery. It has dropped because there's no marriage muhurat dates between December 15 and January 15, but things will pick up from next week," Bachhraj Bamalwa, director, All India Gem & Jewellery Trade Federation, said.
Analysts said that gold is likely to trade with a broad negative bias, as the present fundamentals restrict a significant recovery in the yellow metal. In the international market, gold is trading between $1,080 and $1,275 an ounce.
Source : economictimes.indiatimes.com
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