Gold prices dent festive sales

The recent gold rate at a whopping Rs 32,000 per 10 gm, an all time high, came as a shock to the Indian consumer, especially when it comes just before the forthcoming festive and marriage season, Diamond World reports in its Weekly E-Post. The price has constantly been on a rise and the trend is expected to continue – rendering both consumer and businessmen worried, in the current trends of fluctuating inflation rate and economic strain. In the international market, the precious metal touched a six-month high as it rests at $1,701 an ounce.
According to the WGC, demand for gold in the second quarter of 2012, dropped 7 percent (y-o-y basis) in volume to 990.0 tonnes. Gold jewellery demand was down 15 per cent and investment demand dropped 23 per cent. Being the largest gold consumer in the world, the Indian market’s festive and wedding demand was expected to lift global gold demand.
The recently held IIJS- 2012 did show some signs of retail demand lifting a little, but the hike in prices at such levels does not seem quite favourable to the market. Also, gold imports into India are likely to be hit with rupee instability and rising prices.
On a positive note, the industry would get a boost if demand can upholds moderate optimism.