Gold prices are poised for the biggest weekly gain in nearly two months as hopes of preventing the U.S. Federal Reserve from raising interest rates and worries in the banking sector have stimulated appetite for the precious metal, considered a safe-haven asset.
Lower buying, at the world’s second-largest consumer of gold, could limit the price rise currently underway in the yellow metal, with bullion trading near all-time highs.
Lower demand for gold imports could also help reduce India’s trade deficit and support the rupee.
Data from the World Gold Council showed that demand during the first quarter fell to 112.5 tons, with lower demand for jewelry and investment, due to higher local prices, which reached a record high of 61,845 rupees ($757.38) for 10 grams. THURSDAY.
“Demand will continue to be weak over the next two quarters,” said Somasundram, WGC India’s regional chief operating officer, and “may pick up in the fourth quarter provided the monsoon rains well.”
Good monsoon rains typically increase food grain production and improve farmers’ incomes. Two-thirds of gold demand in India typically comes from rural areas, where jewelry is a traditional store of wealth.
India recently celebrated Akshaya Tritiya, the second biggest gold buying festival after Dhandradas, but demand at this festival was slightly weaker than last year.
Somasundram said rising gold prices prompted some people to sell their old jewelry and coins, which led to an increase in the supply of used gold. In the second quarter, the supply of Used gold jumped 25% from a year ago to 34.8 tons. , the highest level in two and a half years, according to data from the World Gold Council.
The regional CEO of the World Gold Council’s operations in India also confirmed that India’s gold demand in 2023 could range from 750 to 800 tonnes, compared to 774.1 tonnes in 2022.
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