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Today: Tuesday, January 23, 2018
 
INTERVIEW - Prosperity fuels gold investment demand in India 28-08-2010
 
VARCA, India (Reuters) ? Prosperity and higher savings are changing the way Indians

perceive gold, driving them to invest in coins, bars and exchange-traded funds, a senior

official in a prominent gold importing bank said on Saturday.
India, the world's largest market for gold that consumes around 700 tonnes of the metal a

year, has traditionally been a market for jewellery, which is the most common gift during

religious events and weddings in the country.
The investment demand is more a function of disposable income as the overall savings of

the country increases, Sunil Kashyap, head/managing director at Scotia Capital told

Reuters in an interview on the sidelines of a gold conference in Varca in Goa.
The Indian economy is seeing a growth of about 8 percent and last year recorded a per

capita income rise of more than 10 percent, according to government data. On an average,

Indians save over 30 percent of their income.
The demand for 100 gram gold bars is quiet strong among investors seeking to lock away a

part of their wealth, said Kashyap, when asked which product were investors most drawn

to.
In the April to June quarter, India's investment demand for gold was at 41.5 tonnes, up 7

percent on year, while jewellery demand stood at 123 tonnes, down 2 percent on year,

data from the World Gold Council shows.
You buy jewellery now, may be over 10 years that fashion would have changed. It is

better to buy coins, bars and then convert it into jewellery, he said explaining the rationale

investors were seeing while buying coins and bars.
Earlier people used to buy chains.
Jewellery and investment demand will, however, be driven by different factors, he added.
There will be fluctuations between the share of jewellery demand and investment. While

jewellery demand will be festival related, investment demand will be price sensitive, he said.
Kashyap said the festival season demand for gold looked promising this year as an

adequate monsoon is set to boost farm incomes. India's appetite for gold saw the sharpest

fall in over a decade in 2009 because of a severe drought.
We are entering into a peak period of September and October and onwards, so India might

do (imports of) 600 tonnes this year, he said. Last year, India imported 480 tonnes of

gold.
India's gold demand surges during key Hindu festivals such as Dussera in October and

Deepawali and Dhanteras in November. Dhanteras is India's single biggest gold buying day

when people buy the metal to invoke prosperity.
Scotia is the only foreign firm among a group of 23 banks and agencies licensed to import

gold into India.
While Kashyap did not give details on Scotia's share in the Indian gold market, industry

members say it has a domineering presence and caters to major Indian traders and

jewellers.
(Writing by Ruchira Singh, Editing by Himani Sarkar)
 
 
 
 
 
 
 
 
 
 
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