- Title: INDIA: Record gold prices to take sheen off Indian festive demand
- Date: 18th September 2009
- Summary: NEW DELHI, INDIA (REUTERS) (SEPTEMBER 17) JEWELLERY SHOPS IN DELHI'S POPULAR KAROL BAGH MARKET AREA BILLBOARDS OF VARIOUS JEWELLERY SHOPS INTERIOR OF A JEWELLERY SHOP A SALESMAN SHOWING GOLD BRACELETS TO A CUSTOMER GOLD BRACELET FACE OF THE CUSTOMER A LADY CUSTOMER TRYING OUT A RING ON HER FINGER GOLD BANGLES AND BRACELETS ON DISPLAY GOLD BANGLES (SOUNDBITE) (Hindi) PADAM CHAND GARG, A LEADING DELHI-BASED JEWELLER, SAYING "After two days the festive season will begin, the wedding season is also about to start. This year we are anticipating some dip in demand during the festive season because of the high gold price." GOLD NECKLACES ON DISPLAY MORE OF GOLD NECKLACES ON DISPLAY A GOLD ARMLET ON DISPLAY A GROUP OF CUSTOMERS SITTING AND LOOKING AT GOLD ORNAMENTS SALESMAN (SOUNDBITE) (Hindi) INDU GOEL, A GOLD CUSTOMER SAYING: "Price (of gold) is very high, making it really difficult to buy. We cannot buy as much as we want to buy but if one really needs to buy -- then there is no choice, no matter what the price." GOLD BISCUITS RAJESH NARULA, A GOLD / COMMODITY ANALYST WITH K & A SECURITIES PRIVATE LIMITED (SOUNDBITE) (English) RAJESH NARULA, A GOLD / COMMODITY ANALYST WITH K & A SECURITIES PRIVATE LIMITED, SAYING "I think it is going for a little bit more surge. I think $1,050 is where I see it going in the very short term. Probably from there it might have a correction up to $1,020 but in the long term I think gold can touch $1,100 in another four to five months." GOLD BANGLES SALESWOMAN CUSTOMERS AT A GOLD SHOP A SIGNBOARD READING "HALLMARKED GOLD JEWELLERY AVAILABLE HERE" TRAFFIC ON THE BUSY KAROL BAGH JEWELLERY MARKET STREET
- Embargoed: 3rd October 2009 13:00
- Keywords:
- Location: India
- Country: India
- Topics: Economic News,Religion
- Reuters ID: LVA2VLZ7XJIHBPOWXWNPNMG8QP2U
- Story Text: A surge in gold prices is set to take sheen off the precious metal's demand in its biggest market, India, as the country enters the busy festive season, traders and analysts said on Thursday (September 17).
Gold prices hovered near 18-month highs on Thursday, a day after the dollar slid, with optimism about the global economy prompting investors to buy riskier and alternative assets.
Traders said the correlation between the dollar and gold has deepened as gains in bullion accelerated, with currency dealers also taking cues from the gold market to bet on the greenback's weakness.
In New Delhi's jewellery market Karol Bagh, the shopkeepers were keeping their fingers crossed ahead of the festive season that is set to kick off from Saturday.
India's gold demand normally rises between August and October, when consumers buy bullion for auspicious reasons to celebrate major festivals such as Dussera, Diwali and Dhanteras.
Padam Chand Garg, a leading Delhi-based jeweler, said he anticipated a 15 percent drop in sales because of the prevailing prices.
"After two days the festive season will begin, the wedding season is also about to start. This year we are anticipating some dip in demand during the festive season because of the high price of gold," Garg told Reuters at his glittering showroom.
India, which accounted for more than 20 percent of global demand for gold jewellery in 2008, has seen a steady decline in demand since bullion first powered to $1,000 an ounce in February, which also sent local futures to a record high at 16,040 rupees ($329.90 U.S dollars) per 10 grams.
Last week the president of the Bombay Bullion Association had forecast India's gold imports to fall to 350 tonnes from 523 tonnes last year.
For centuries gold has held a timeless allure for Indian women, who like to showcase their best jewellery on social occasions like weddings and festivals.
It also forms an integral part of an Indian wedding where parents of the bride give their daughter gold jewellery in her dowry, as a means of financial security.
Indu Goel, a shopper at one of the jewellery shops, said the runaway price of gold would force people to buy less.
"Price (of gold) is very high, making it really difficult to buy. We cannot buy as much as we want to buy but if one really needs to buy -- then there is no choice, no matter what the price," Goel said as she tried some gold rings on her fingers.
Gold can be bought as an investment in the form of coins and small bars, gold certificates, gold-backed securities or gold-oriented funds, in which investors can buy shares of mining companies.
Rajesh Narula, an analyst with the commodities trading firm K&A Securities, said he expected the rally in gold to continue for some time.
"I think it is going for a little bit more surge. I think $1,050 is where I see it going in the very short term. Probably from there it might have a correction up to 1,020 but in the long term I think gold can touch $1,100 in another four to five months," Narula said.
Spot gold was trading at $1,023 an ounce as of 0630 GMT, compared with New York's notional close of $1,016.70. It rose as high as $1,020.50 an ounce on Wednesday, its highest since March 2008.
U.S. gold futures for December delivery were barely changed at $1,019.6 an ounce from $1,020.20 on the COMEX division of the New York Mercantile Exchange.
The contract reached a high of $1,023.30 on Wednesday, unseen since July 2008. U.S. gold futures are eyeing the prior record high on gold's continuation chart of $1,033.90 an ounce.
Buying of gold accelerated when the dollar extended losses against the euro to its 2009 low, reinforcing the metal's appeal as an alternative investment.
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