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South revives appetite for gold; demand may rise post polls

South revives appetite for gold; demand may rise post polls

April 15, 2019


Gold consumers in south India are seen leading a revival in demand for the yellow metal, which has recorded a 7 per cent drop in prices in the domestic market since mid-February.


Some jewellers in south India, which accounts for 40 per cent of the country’s annual consumption of 800-850 tonnes of gold — said buying of the metal will pick up once voting for the general election is over in the region on April 23.


Anantha Padmanabhan, chairman of All India Gem & Jewellery Domestic Council (GJC), told ET that the model code of conduct during the election period does not allow a person to carry more than Rs 50,000 in cash. To carry an amount over this limit would require documents, including legal source of the funds and their end use.“Despite the model of conduct, consumers from South India have started buying gold with Tamil Nadu. It will further pick up after April 23 when elections in this part of the country will be over,” Padmanabhan said. “So, we are expecting good demand. The mood is upbeat among consumers.”He explained that since the price drop has coincided with the Tamil New Year on April 14, and ‘Vishu’, which marks the New Year in Kerala, demand has picked up in the region. “Akshaya Tritya is the next big occasion to buy gold, when north and western India will purchase gold. Akshaya Tritiya falls on May 7, and closer to the date purchase of gold from these two regions will start picking up. However, some consumers have already started placing orders at this price level and will take delivery on Akshaya Tritiya,” Padmanaban said.


Softening of prices is one of the major reasons why consumers have started buying the yellow metal. Gold was selling for about Rs 34,500 per 10 gm in mid-February. It has now dropped to about Rs 32,000 per 10 gm level.There are indications that prices may drop further. Added to this is the strengthening rupee which is pulling down gold prices.Internationally, gold prices fell to more than-a-week low on Monday as solid Chinese data and positive signs on the US-China trade front boosted equities and allayed concerns about a global economic slowdown. Spot gold edged 0.2 per cent lower to $1,286.92 per ounce, having touched $1,286.15. US gold futures fell 0.4 per cent to $1,289.70 an ounce.Mukesh Kothari, director, Riddi-Siddhi Bullion, said that with the drop in prices demand for jewellery has picked up. “People are buying to meet wedding demand and also placing orders for Akshaya Tritiya. But investment demand has not picked up since the price of the metal is on downward trend.”


Meanwhile, jewellers are restocking gold to meet the demand for Akshaya Tritiya.


Source: https://economictimes.indiatimes.com/