Global demand for gold, which hit an all time high during the first quarter of fiscal 2007 was driven by Indians. But thatâ€™s not unusual. Indians love gold. Whatâ€™s interesting is the amount: Indians bought 317 tons or 3.17 kg of this much sought after metal â€“ equal to almost of what all the mines in the world produced in the same quarter.
During last quarter, a strong currency leading to a fall in gold prices in rupees terms, a booming economy putting more money in the buyersâ€™ hands and a highly successful festival seasons all combined to a 91% rise in demand for the yellow metal in India.
A World Gold Council (WGC) report pointed out some emerging trends in India, the single largest market for gold. It is only the demand for gold jewelry that pushed total demand. WCG data showed that Indians are lapping up gold even as an investment optioning. Investment demand for gold in India nearly doubled to about 77 ton, compared to 89% jump in demand jewelry at 240 ton: both all time peak levels.
The figures from India this quarter are particularly pleasing and will continue to encourage ongoing love affair with gold.
Thereâ€™s nothing new about Indiansâ€™ affinity for gold. But one of the factors that gave a big fillip is the robust economic growth leading to rising income levels in urban as well as rural areas. In addition, a robust economy and a bull run in the stock market also led to a strong rupee.
Globally gold prices fell about 2.3% down to $649 per ounce (1ounce = 28.35 grams) from $665 at the beginning of the quarter, while the rupee appreciated against the dollar by about 6.3% to 40.70 from 43.47. The two combined to pull down local prices in the Mumbai market to Rs 8,615 per 10 gm from Rs 9,315 a drop of 7.5%.
The other major factor that boosted gold sales was the Akshaya Tritiya festival (considered auspicious for buying gold and silver).