Gold demand to go up further due to festive buying

Business

oi-Monika Nihalani

By Monika Nihalani

Published: Wednesday, August 31, 2011, 16:02 [IST]

Gold remained volatile in recent times due to couple of good news and bad news. Despite, high prices, it is highly expected, that demand could pick up soon as festive season in India has already started.

According to World Gold Council (WGC), Indian and Chinese demand increased 38% and 25% respectively during the quarter as compared to previous year quarter due to number of factors such as relative economic prosperity, high inflation rates, good monsoon in India, as well as number of forthcoming festivals and holidays in which gold purchasing is customary.

As per the recent GDP figures, Investment in valuables has exceeded the change in stocks.

As per the statistics of WGC, the price of one troy ounce of gold in India which was Rs 44,767 in June end 2009 rose by 29% to Rs 57,777 by June end 2010 and then went up further by 16.5% to Rs 67,299 by June end 2011.

Jewelers in India are expecting demand for gold (jewelery, coins and bars) to go up by 25% this year on Diwali.

Chinese buying will also move up due to week-long holiday in early October, which traditionally benefits the gold retail business.

On global economies front, investors are closely keeping their eye on United States over the Federal Reserve Policy meeting starting September 20, during which Fed will decide to implement another round of quantitative easing or not.

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