Posted on 01/03/2013 10:01:16 AM PST by DeaconBenjamin
KOLKATA: Farmers are flocking to jewellery shops to buy gold, boosting rural demand that accounts for about 70% of the precious metal sold in India and starting 2013 on a glittering note for the bullion trade after a slump last year.
Farmers are buying gold as prices have ebbed from record levels, and on prospects of a bumper harvest and better prices from the winter-sown crop, after a lean period when erratic monsoon rains had hurt kharif output and rural incomes.
Dinesh Chouhan, a 48-year-old farmer from Rajasthan's Alwar district, says he has just bought a 10 gm gold chain for her daughter whom he plans to marry off next December. "The crop prospect is good this time and we are expecting better price recovery. Moreover, the price of gold has also come down. So I decided to buy a gold chain for my daughter," said Chouhan, who cultivates mustard over five acres.
Similarly, Swapan Das, a farmer from West Bengal, bought jewellery for his wife and unmarried sister, as he expects better prices and a good harvest.
Bullion dealers and jewellers expect rural sales to help total demand rise 10-15% this quarter. Rural buyers stayed away during Diwali and the festive season as a patchy monsoon had affected the kharif crop. India's gold imports last year fell to 750-800 tonnes from 969 tonnes in 2011.
WEDDING SEASON TO AID DEMAND
"Rural demand is expected to improve in the January-March quarter as farmers are expecting better returns this year. Moreover, the wedding season will be in full swing from January. This will give a fillip to rural demand," said Bachhraj Bamalwa, chairman, All-India Gem and Jewellery Trade Federation. He is expecting a 10-15% growth in the last quarter of the current fiscal year.
The gold-buying season in India usually starts from October and continues till March of the following year. This year, demand had slowed down due to a patchy monsoon and rising prices. Prices of gold had crossed Rs 33,000 per 10 gm as the rupee weakened against the dollar.
"During Diwali, there was some buying, but that was restricted largely to the urban population. But now we are seeing rural demand gradually coming in. From January 10, the demand will rise," said Lalit Jagawat of Zaveri Bazar-based Nakoda Bullion. In Mumbai, spot market gold price hovered around Rs 31,100 per 10 gm. Price of gold has fallen in the past two months as the rupee has strengthened against the greenback.
The price of gold in India is usually determined by international rates. During festive season, local demand and currency movement also influence prices to some extent. The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.
But there is a fear that demand may suffer as Finance Minister P Chidambaram on Wednesday indicated the government may increase import duty on gold to control the high current account deficit. Concerned over ballooning deficit, the government had in March 2012 doubled the import duty on gold to 4%.
Gold is the biggest contributor to India's import bill after crude oil. The deficit widened to a record 5.4% of GDP in the September quarter due to slowing export growth, high gold imports and a hefty oil bill. But jewellers do not see a big impact on rural demand if import duty is indeed raised.
gold... farming...
ny mind went to World of Warcraft
India is already the highest consumer of gold in the world.
I guess he wants to get rid of her before she's too old to cut the mustard..................
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