Gold price at two-year high, demand to see new lows

By Swansy Afonso
NEW DELHI: Gold demand in India, the world’s second-biggest user, will probably shrink in the second quarter as a surge in local prices to the highest in two years deters buying for a festival next week and weddings this month.

Purchases may slide to about 100 metric tonnes in the three months through June from 125 tonnes in the period to March and 154.8 tonnes a year earlier, said Bachhraj Bamalwa, a director with the All India Gems & Jewellery Trade Federation.

Imports were probably 15 tonnes to 20 tonnes in April and 15 tonnes in March, he said. Prices in Mumbai have jumped 21% this year and reached the highest since March 2014 on Monday. That reflected gains in global rates as worries over the world economy prompted the US Federal Reserve to refrain from further increases in borrowing costs, boosting the appeal of non-interest bearing assets such as bullion.

“Normally people place orders in advance (for Akshaya Tritiya) so that they can lock in the gold price but we have not seen that this year,” Bamalwa said.