After acquiring large amounts of gold just a short couple of years ago, India is ready to invest in the gold market again. It was reported that ahead of major festivals and weddings and with a stronger rupee India is becoming a goldbug again.
India, the world’s largest purchaser of gold, has increased its demand for gold for the first time in six quarters. The jump in gold imports comes as the price of bullion has decreased, which makes it more attractive for goldbugs worldwide, and ahead of important festivals throughout the country.
Gold was the most-active December delivery for the Multi Commodity Exchange (MCE) and dropped 0.92 percent per 10 grams for a value of 31,000 Indian Rupee ($580 USD). The strong demand can be attributed to a higher Indian Rupee, which rose 0.5 percent during Monday’s trading session.
Demand is expected to rise in the coming months with Diwali and Dhanteras beginning next month. Also, weddings usually transpire around this time of the year. Gold dealers in India are expecting the demand to persist in the foreseeable future.
“Buyers are active. They were not expecting correction in prices due to firmness in overseas prices, but strong rupee made it possible. Jewellers are restocking for Diwali," said a Mumbai-based dealer with a state-run bank dealing in bullion in an interview with Reuters. “Demand will remain healthy if prices stay at current level for some more days.”
The country has made news among the bullion world this year. Digital Journal reported earlier this year that India agreed to purchase Iran’s oil in gold, while China has also agreed to follow the same policy.
In 2010, India purchased a substantial amount of gold, but with the severe decline in the rupee, the country’s appetite for gold subsided. A new report from Penny Stock Detectives suggests that Asian central banks are preparing for gold to go up in the remainder of the year and purchase a significant amount.
At the time of this writing, gold is up $1.50, or 0.09 percent, at $1,725.50 (USD).