Good monsoon profitable for gold traders; rural demand on rise
A normal monsoon forecast by the Indian Met Department (IMD) has brought a big smile to the Indian gold trade. Rural demand has already picked up as the Akshaya Tritiya is nearing and the news of a normal monsoon has further added fuel to it. Bullion dealers are expecting gold imports to be close to 1,000 ton in 2013 despite a spurt in prices of the yellow metal over the past week.
Talking to ET, Prithviraj Kothari, managing director of Riddisiddhi Bullions, said: “There is a huge demand of gold all over India. Jewellers are asking for more gold. This year, imports will be close to 1,000 ton if this trend continues throughout the year. The news of a normal monsoon will also spur demand for gold in rural India.” The IMD has said that the crucial southwest monsoon rains for the year 2013 would be normal at 98% of the long period average.
In 2012, the country had imported 864.2 ton gold. “In the last 10 days, the country has imported 25-30 ton gold as there was hectic buying all over,” said Suresh Hundia, a Mumbai-based bullion dealer. The spot price of gold in Mumbai market was hovering around Rs 27,600 per 10 gm on Monday and the June contract for the metal on MCX was around Rs 27,700 per 10 gm.
Local jewellers from Madhya Pradesh, Rajasthan, Punjab and Haryana said that farmers are buying gold according to their capacity. “Last year, this sort of an interest was not seen among the farmers. During this period of last year, gold prices had suddenly shot up as government had increased the import duty to 4%.
The crash in the yellow metal price coupled with a forecast of normal monsoon has enthused rural community to go for the precious metal,” said Harminder Singh, a Punjab-based jeweller. Rajesh Agarwal, spokesperson of Soybean Processors Association of India, said: “It is true that soya bean farmers of Madhya Pradesh are purchasing gold now. It is common for local households to park a portion of their wealth in the form of gold.”
In south India too, there has been a demand among the rural community. “Nearly 60% of India’s gold is consumed by rural India and monsoon plays a critical role in it. The sentiment is very positive now and they are going in for jewellery in particular.
Government should ask bullion dealers to sell gold only to registered jewellers and retailers. However, prices of gold will be range-bound now and we do not see a sudden spurt. It may fluctuate in the current range only,” said Vinod Hayagriv, managing director of Bangalore-based jeweller C Krishniah Chetty & Sons.
CP Krishnan, director at Geojit Comtrade, said: “This week is very critical for the yellow metal as a lot of data will emerge from US and Europe. However, if rupee does not depreciate against dollar, then the prices of gold will not go up much. Even central banks are likely to offload gold in the market to meet funding requirements. So, we do not think demand for gold to dry up suddenly in Indian market.”
In the global market, bullion for immediate delivery rose as much as 1% to $1,477.10 an ounce. Gold is heading for an 8% drop in April after the metal plunged into a bear market this month.
Source: Bullion Bulletin