The World Gold Council (WGC) has indicated that India’s gold demand may improve through to December because of positive rainy season and government efforts to raise farmers incomes.
According to Reuters, India is the world’s second-biggest gold consumer and higher demand there could support global prices XAU= that have risen over 5% since mid-December, while a rise in imports of the metal would widen India’s trade shortfall.
Somasundaram PR, who is the managing director of WGC’s Indian operations, has said that the government’s measures to boost rural incomes by increasing the subsidized prices for food grains and the forecast for a normal monsoon rains this year will strengthen demand.
“The aggregate demand in April to December would be higher than last year’s three quarters,” he said.
India’s gold consumption this year is likely to be between 700 and 800 tonnes versus 737.5 tonnes last year, Somasundaram said. Indian demand has averaged 840 tonnes over the last 10 years.
A majority of India’s gold demand comes from rural areas where jewellery is a traditional store of wealth.
India Meteorological Department noted that the country is likely to receive average monsoon rains this year, possibly raising farm and economic growth in Asia’s third-biggest economy.