Indian Gold Demand Seen Falling as Wedding Season Ends
May 05, 04
Demand for gold in India, the world's largest market for the precious metal, is expected to peter out later this month as the wedding season comes to a close.
The December-May marriage season boosts purchases of gold jewelry in India, which accounts for approximately one-fifth of global gold demand. April and May are the peak months for weddings in the mostly Hindu country.
Hindus traditionally wed during the December – May period, months which are considered to be blessed.
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Gold jewelry features strongly in Hindu marriages, with parents giving their daughters gold gifts as a form of financial security. Jewelry accounts for about 85 percent of Indian gold demand
Gold demand is also high currently due to its relatively low price, particularly given the rupee’s strengthening against the dollar in recent months. That is prompting jewelers to stock up on gold and customers to buy jewelry for weddings.
The fall in the price of gold and some festivals in southern India have also led to strong retail sales, with jewelers re-filling stocks and investors making large purchases.
Spot gold was selling on Wednesday for less than $390 an ounce down from $396 a week ago and $420 a month earlier.
Jewelers and investors are stocking up on gold, as the market believes international gold prices will rise in the coming weeks, traders say.
India imports an average 1.6 tons of gold daily to meet 70 percent of its gold needs of more than 800 tons a year.
Purchases of gold jewelry fall dramatically in the rainy months of June and July.
Following the decline in gold sales expected at the end of this month, demand is likely to pick up from the middle of August and peak in November around the time of Diwali, the Hindu festival of lights.