Strong Revival In Indian Demand For Gold

Commodity Online reports that gold coins turn hot commodity in India.

(emphasis mine) [my comment]

Gold coins turn hot commodity in India
2009-10-18 16:25:00

NEW DELHI (Commodity Online): Gold coin is the hottest commodity in India these days. India, the world's largest consumer of yellow metal has been the best buying ground for gold jewellery items all these years. But many Indians these days prefer gold coins and bars as investment options.

"The customer preference of gold buyers in India is changing fast. All these years, buying gold jewellery items were considered the best investment option. But these days, people are shifting from buying gold jewellery to gold coins," said Aditya Sinha, a Delhi-based bullion dealer. [India's changing customer preference suggest a greater focus on gold's monetary qualities.]

He says
one of the main reasons for people buying gold coins is that they are safe to handle. "The fact that gold coins do not attract making charges lure people to buy them," Sinha added.

Banks, brokerage houses and post offices across India are promoting the sale of gold coins, thanks to the new-found fascination that bullion buying customers have to gold coins.

During the ongoing Diwali religious festival season, gold coins buying has been going on at a brisk pace.

Commodity Online reports that around 15 tonnes of gold sold on Dhanteras in India.

Around 15 tonnes of gold sold on Dhanteras in India
2009-10-16 15:55:00

MUMBAI (Commodity Online):
Despite the ever high gold prices, Indians have ignored the price factor and continued to buy the yellow metal on the auspicious day of Dhanteras, when Indians believe they could attain fortuity by having gold.

Reports showed that around 15 tonnes of gold were sold off in a single day across India on Dhanteras, though the prices for a ten gram gold cost at Rs 16000 as against Rs 12070 per 10 gram in the previous year.

Traders said the business was dull during October until 15 Thursday, when consumers poured into the jewellery shops and banks to purchase gold. Traders expressed hopes that this buying streak is expected to continue to next couple days after Diwali.

gold prices surged significantly by around 37% in the last one year due to high investment in precious metal, finding safe haven. However, physical purchase was poor by the consumer because of higher prices, Ashwin Derasari, Senior Manager of Bombay Bullion Association was quoted by Asian Age daily on Friday.

now Indian consumers realized that gold may not see the comfort level of Rs 13500 to Rs 14000 per 10 gram in future and so they have started buying gold during the festive season, he added.

In the next four months, Derasari said gold prices may cross the Rs 17,000-mark. An analysis of the price trend of the precious metal showed that gold has become expensive by more than three-fold since 2000. The price of gold in 2000 was at around Rs 4,500 per ten gram. The sharp rise of the gold price witnessed following the slowdown has deterred the purchasers since the dawn of this year.

If gold import figures were to be believed,
the demand for yellow metal has got revived in September after an eight-month long lull. Experts say gold imports during September was about 40 tonnes, which is still 26 per cent less compared with the last year corresponding period's import figure of 54 tonnes.

My reaction: Gold coins turn hot commodity in India

1) India's changing customer preference towards bullion suggest a greater focus on gold's store of value qualities

2) Indian consumers have realized that gold will aren't coming back down and are now continuing to buy the yellow metal despite its high price.

3) The strong revival of Indian demand for gold in September probably played an important part in pushing prices over $1,000.

Conclusion: Indian consumers have not only gotten used to higher gold prices, but are also focusing more on the metals monetary qualities. This revival of Indian demand is very bad news for the dollar and those on the short side of gold.

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One Response to Strong Revival In Indian Demand For Gold

  1. Chicken says:

    Aren't Chinese citizens also buying gold? I would think the Yuan would be a great place to park cash as the $USD peg is bound to come under more stress.

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