Hindu wedding season underway in January traders see demand for gold growing.
BOMBAY, Dec 30 (Reuters) - More and more people in India,
home to the world's biggest gold stocks, are queuing up to sell
their jewellery as prices soar to five-year peaks.
Traders said on Monday they estimate the supply of scrap
metal has jumped four-fold to 50 kgs a day in the Bombay market,
the main consuming centre.
That has squeezed imports and traders say the trend is likely
to continue for the next two weeks if global prices remain high as
domestic demand was dull due to an inauspicious period for Hindu
weddings.
Rajiv Popley, a director of jewellery trading firm Popley
Gold, said the volume of new ornaments sold in exchange for old
gold at his showrooms had almost doubled in the past one month.
"Inflow of recycled gold has shot up as high prices have
attracted many consumers to dispose off their old jewellery,"
said Prithvi Raj Kothari, a gold importer.
Traders buy the metal from consumers at slightly lower than
market prices and sell the recycled gold at below import costs to
jewellers.
"The import business is very poor at the moment," said
Narendra Singh Rathore, a gold trader based in the northwestern
city of Jaipur, a leading gold importing centre. "Traders are
waiting for some stability in the prices before resuming imports."
Spot gold was quoted at $349/350 an ounce at 0720 GMT
in Asia, up from late New York $348.90/349.50 on Friday. It was
traded at about $319 a month ago and at $279 a year earlier.
Local prices track global trends as India imports 70 percent
of its annual gold requirements of 750 to 800 tonnes.
World gold prices have soared on weakness in the U.S. dollar
and political tensions over Iraq and North Korea. Prices of the
safe-heaven metal tend to rise when the dollar weakens as bullion
becomes cheaper to non-U.S.investors.
Popley said traders would feel comfortable to import gold if
prices dropped to $342.
Traders said imports could rise after two weeks, even if
global prices remain firm, as domestic supplies would not be able
to cope with demand when the wedding season starts in January.
Jewellery accounts for about 85 percent of India's annual
demand for gold, and forms an essential part of Hindu weddings as
parents gift the metal to their daughters for financial security.
Gold demand in India fell 8.5 percent to 116.4 tonnes during
July to September from the third quarter of 2001. Imports fell
12.4 percent to 87 tonnes during the period.
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