India is on the cusp of a gold boom this week. With the onset of
festival season in India on August 24 (Raksha Bandhan), bullion
market is set to boom as demand for the yellow metal will shoot up
in the country.
On August 24, India will celebrate Raksha Bandhan, an auspicious
occasion to celebrate brother-sister relation, and demand for gold
will see a major jump before this as brothers and sister buy
jewellery to gift their siblings.
The festival season in India will start next week and continue
till November (Diwali). Gold sales in India generally decline
around 60 per cent during June 16-August 15, as retail consumers
abstain from fresh purchases.
This time around, the high gold prices may keep a few buyers
away from jewellery shops but they may go for diamonds also now as
the stones have become more affordable for the Indian middle
Gold imports in India are estimated to have declined by 50 per
cent to 30 tonnes during June-July, compared to approximately 60
tonnes in the comparable period last year.
Since the main gold consuming class, farmers, require fresh
money to buy high-yielding seeds during the kharif season, scrap
sales generally increase at this time of the year. As a result,
scrap availability has almost doubled.
Experts estimate that India's gold demand will reach 1,000
tonnes within the next three years. And the anticipated Indian gold
consumption of 1,000 tonnes will represent 42% of total new world
Considering this never-ending appetite of Indians for gold, the
government is all set to go for a gold hunt now. Concerned over its
increased dependence on bullion imports, government of India has
asked Geological Survey of India (
) to tap the countries potential to dig out gold and diamond
reserves spread over several states.
India is estimated to have 20,000 tonnes of gold and diamond
reserves spread over several states. The Indian government has
asked GSI to explore additional reserves of gold and diamonds in
Andhra Pradesh, Karnataka, Madhya Pradesh, West Bengal, Rajasthan,
Bihar and Chhattisgarh.
India has been the top importer of gold for several years and
the Indian government is concerned over its over-dependence on
imports for its bullion needs. The concern increased during the
recession time when prices of gold shot up beyond $1,000 per ounce
in the international markets. Moreover, gold has become the safest
have available for investors at present.