Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Focus on Fundamentals: Indian Gold Imports Expected to Jump in Fourth Quarter

  by    0   0

After hitting their highest level in 15 months in August, analysts expect Indian gold imports to continue climbing in the fourth quarter.

The flow of gold into India hit a 15-month high when it more than doubled to 100 tons in August. Demand started climbing in July when imports jumped for the first time in seven months.

India ranks second in the world in gold consumption. The country consumes between 800 and 900 tons of gold annually. Only the Chinese buy more gold. Because of its appetite for the yellow metal, Indian gold demand can have an impact on the global market.

According to a Reuters report, analysts expect demand to remain strong through the final quarter of 2018.

India’s gold imports may rise in the fourth quarter as investors seek alternatives to faltering equity markets and a plunging rupee at the same time traditional buying will rise during the festival season, said multiple sources involved in the market.”

Analysts say Q4 imports could rise as much as 9% year-on-year to around 250 tons. Bullion dealer Bachhraj Bamalwa said he expects festival buying to be robust this year and investment demand is also gaining traction.

Analysts had projected Indian demand for gold would surge in the second half of this year. Good monsoon rains should lead to a bountiful harvest and higher minimum support (MSP) for summer crops will put more cash in farmer’s pockets. Analysts predicted a 25% increase in demand for the yellow metal compared to the second half of 2017.

Indians have been taking advantage of the lower gold price in recent months and kicked off the traditional gold-buying season early this year. World Gold Council managing director in India PR Somasundaram told the Times of India that positive sentiment is returning to the country’s gold market after a “gloomy” first half of the year.

Based on discussions with the market, preparations for the fourth quarter are proceeding well with consumer sentiments. Barring Kerala [A southwest region in India experiencing severe flooding] the monsoons have been good and the final quarter is expected to see a rise in demand.”

Analysts say falling Indian stocks and the weak rupee may drive investment demand for gold in India. Like many emerging economies, India is feeling the pressure of a strong dollar. India’s NSE equity index has fallen 7%  from a record peak in August and the value of the rupee has dropped 13% this year. Meanwhile, local gold futures have risen about 6% since a low in mid-August. Bullion wholesaler Daman Prakash said this has prompted Indian investors to look for ways to diversify their portfolios.

Rupee is consistently falling and we don’t know how much it will fall further. It is prompting investors to hedge their risk with exposure to gold.”

Investment demand for the yellow metal began falling off in 2014 as equity markets rallied. But as one investor told Reuters, many think there is limited upside at this point, “so they are moving back to gold.”

Gold is interwoven into India’s marriage ceremonies and cultural rites. Indians also value gold as a store of wealth, especially in poor rural regions. Two-thirds of India’s gold demand comes from these areas, where the vast majority of people live outside the official tax system.

Gold is not just a luxury in India. Even poor people buy gold in the Asian nation. According to an ICE 360 survey last year, one in every two households in India purchased gold within the last five years. Overall, 87% of households in the country own some amount of the yellow metal. Even households at the lowest income levels in India own some gold. According to the survey, more than 75% of families in the bottom 10% had managed to buy gold.

Because of its appetite for the yellow metal, Indian gold demand has a significant impact on the global market.

The World Gold Council listed economic growth, particularly in India and China, as one of three macro trends it sees as bullish for the gold market in the coming months. According to the 2018 World Economic League Table, India will leapfrog France and England in 2018 to become the world’s fifth largest economy in dollar terms.

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

 


Related Posts

Is China Becoming the Newest Front in the War on Cash?

five dollar bill on fireBack in 2017, the IMF published a creepy paper offering governments suggestions on how to move toward a cashless society even in the face of strong public opposition. It hasn’t been in the news a whole lot lately, but the war on cash undoubtedly continues. In fact, the Chinese Communist Party (CCP) may be planning […]

READ MORE →

Serbia Joins Central Bank Gold-Buying Spree

Seeking financial and economic safety and stability, Serbia has joined the global central bank gold-buying spree. National Bank of Serbia Governor Jorgovanka Tabakovic recently announced that the bank purchased nine tons of gold in October, raising the country’s reserves to just over 30 tons.

READ MORE →

Inflation’s Up; So What?

Here’s a strange headline for you: “Gold prices near daily highs despite better-than-expected inflation in October.” This headline is bizarre on a couple of levels. First, since when are rising consumer prices and good news? And second, why wouldn’t inflation be good for gold? You really have to buy into the mainstream narratives to write […]

READ MORE →

Powell Lectures Congress About Government Spending the Fed Facilitates

Fiscal 2020 started just like fiscal 2019 ended – with a massive federal budget deficit. And that has Federal Reserve Chairman Jerome Powell worried. In an ironic bit of political theater, Powell lectured Congress about the spending he helps facilitate. The budget shortfall last month was 34% higher than the October 2018 deficit, coming in […]

READ MORE →

Student Loan Bubble Blows Up Another $32.9 Billion in Q3

American consumer debt pushed to a new record of $4.15 trillion in September. Part of that equation – the continued surge in the levels of student loan debt. Student loan balances jumped by $32.9 billion in the third quarter this year, pushing total outstanding student loan debt to a new record of $1.64 trillion. Student […]

READ MORE →

Comments are closed.

Call Now