Saturday, October 04, 2014

Indian gold demand strong ahead of Diwali as prices tumble – GOLD PHYSICALS 
[Editor: Meanwhile, the Gold prices fell below $1,200 an ounce for the first time this year on Friday as the dollar jumped after better-than expected US non-farm payroll data, which could bolster bets on a Federal Reserve rate hike in mid-2015 or even earlier. Now according to statistics, any fall in bullion prices generally leads to a sharp jump in retail sales. Normally, jewellery demand from foreign importers rises in case of a fall in bullion prices. Jewellery demand from domestic consumers, too, rises during the festive season, which is going on. I expect jewellers’ sales in local markets to rise during the coming Diwali and wedding season and foreign markets during Christmas, New Year and Mothers’ Day. With this view in mind, GITANJALI GEMS LTD was recommended to the PAID GROUPS, at Rs.63.50--65, for a short term target of Rs.72-73]
October 3, 2014: Sentiment in the Indian gold market appears to have strengthened ahead of the Hindu festival of Diwali, with premiums once-again gaining momentum as a result of cheaper gold prices.

Demand throughout Navratri, a 10-day religious festival during which Indians buy luxury items such as gold that began on September 25th, was strong based on cheaper gold prices in the rupee of around 26,600 rupees per ounce.

Indian premiums are around $11-15 per ounce over spot for 1kg bars, up from $7-11 previously, market participants told FastMarkets. Further increases are expected in the lead-up to Diwali, the Indian festival of lights – typically a very busy period for the local gold market.

“Demand for gold in India is really picking up at the moment – despite depreciations in the rupee this week, rupee gold prices look healthy amid a generally cheaper gold price,” Chirag Sheth of Metals Focus said. “However, it would be foolish to try to compare the situation with last year, as it is a completely different environment now.”

Rupee gold has followed international prices lower. Spot gold was last at $1,206.20/1.207.70 per ounce, down $7.20 on Thursday’s close – it looks susceptible to falling to a fresh low this year should blockbuster US jobs data pressure it lower.

Deviating from most global trends in the current economic climate, the rupee has held its ground against a surging dollar over the last three months, where most emerging economies are struggling, with market participants apparently actively looking to keep the rupee above 60 against the dollar.

Buying ahead of Diwali will begin now, Sheth added, which is likely to push premiums higher as Dussehra – the final festival day of Navratri and which takes place today this year – draws to a close.

In China, meanwhile, the pick-up in demand expected throughout the Chinese Golden Week holiday, which runs until October 7, has been relatively low compared with previous years, sources said. Premiums in Shanghai remain low at $2-4 over the London spot price, down from $3-5 a week ago, traders said.

In other locations, the Hong Kong rate is up fractionally at $1.20-1.60, Singapore was quoted at $1.20-1.50, down from as much as $2.50 last week, and Dubai still relatively unchanged around $1.

(Editing by Mark Shaw)

Courtesy:  The Bullion Desk
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