Inflation, price rise could dent India’s gold demand in July-Dec -WGC
By Rajendra Jadhav
MUMBAI (Reuters) – India’s gold demand within the first half of 2022 jumped 42% from a yr in the past however consumption within the second half might be decrease than final yr as greater inflation erodes disposable revenue, the World Gold Council (WGC) mentioned on Thursday.
Decrease purchases by the world’s second-biggest gold client may weigh on costs, that are buying and selling close to their lowest degree in additional than a yr.
However falling demand for gold imports may assist slender India’s commerce deficit and assist an ailing rupee.
“Inflation is making it troublesome for individuals, particularly in rural areas, to save lots of extra and allocate to gold,” Somasundaram PR, regional chief government officer of WGC’s Indian operations, advised Reuters.
India’s annual inflation price in June remained painfully above the 7% mark and past the central financial institution’s tolerance band for the sixth month in a row, elevating the prospects for extra price hikes by the central financial institution subsequent month.
Within the short-term, the rise in native gold costs due to a depreciating rupee and improve in import responsibility on the bullion can even harm demand, he mentioned.
India’s demand for gold jumped 43% from a yr in the past to 170.7 tonnes within the quarter by way of June as jewelry gross sales improved due to weddings and the annual Hindu and Jain holy competition of Akshaya Tritiya, when shopping for gold is taken into account auspicious, the WGC mentioned in a report revealed on Thursday.
Within the first half of 2022, gold consumption rose 43% to 306.2 tonnes.
The WGC earlier estimated India’s gold consumption in 2022 at 800-850 tonnes, however the seemingly slowdown in demand within the second half prompted it to scale down that estimate to the decrease finish of that vary at round 800 tonnes.
Increased costs prompting some Indian shoppers to liquidate their holdings, which may raise scrap provides in 2022 above 100 tonnes from 75.2 tonnes a yr in the past, Somasundaram mentioned.
(Reporting by Rajendra Jadhav; Enhancing by Bernadette Baum)
