The Hindu Business Line : 70% rise in H1 jewellery demand

Chennai, Aug. 24 Indian jewellery demand rose by 70 per cent during the first half of 2007 compared with the same period last year. Jewellery demand increased to 387 tonnes from 227 tonnes during the period.

This year jewellery demand is projected to increase by 100 tonnes in view of stable prices, said Mr Marino G. Pieterse, Editor of Goldletter International. Jewellery constitutes about 65 per cent of the total Indian gold demand.

Bank sales have been good with prices in the level of $600 an ounce, said Mr Rajan Venkatesh, Director-India of The Bank of Nova Scotia on the sidelines of a gold conference here on Friday. The strengthening of the rupee by almost 10 per cent also made the yellow metal more attractive, boosting demand.

During the first half of 2006 gold prices peaked to $730 an ounce due to which demand suffered, he said. Generally demand grows when price are stable giving consumers confidence.

Current domestic prices in the range of Rs 8,300 to Rs 8,500 per 10 gms was a good buying level for consumers, said Mr Haresh Kewalraman, Director of The Bombay Bullion Association Limited.

Though the overall trend remains bullish unless the US markets take some more serious beating, money in gold may still not pour in, said Mr Venkatesh. “We see price ruling between $675 and $680 an ounce,” he said adding that unless something drastic happens $700 an ounce will be a tall call.

However Mr Paul Walker, CEO of GMFS, feels that prices would touch $700 an ounce in a secular trend which will hold back Indian demand.

Decoupling of gold from the commodity complex will drive the yellow metal’s prices up, said Mr Walker. Also there is an expectation that the US market will suffer a sustained deterioration which will bring the yellow metal as an investment asset. If gold prices remain at current levels, Indian gross imports will be around 810 tonnes compared with 730 tonnes last year, said Mr Walker. India could import around 140 tonnes each during the last two quarters, he said.

Silver that saw a steep correction in the prices early this week to Rs 16,500 per kg was steadily being absorbed on demand, said Mr Venkatesh. Last year, silver demand was negligible and there were also instances of re-exports owing to poor demand, he added. Silver prices are expected to be the range of Rs 15,500 to Rs. 16,000 per kg in the next 15 days, said Mr Kewalraman.

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