MUMBAI (Reuters) - India’s gold demand could rise as much as 15 percent this quarter to 300 tonnes as pent-up demand following a good monsoon keeps the country on track for yearly demand estimated at 1,000 tonnes.
Some market participants say the excess demand could be met by smuggled gold, which has risen substantially after import curbs were imposed.
More “auspicious” days, when people buy gold, is seen helping to boost demand.
“There are 20 percent more auspicious days and also there is pent-up demand from last quarter. Monsoon has also been good, so all indications are demand will be robust,” said Somasundaram PR, World Gold Council’s (WGC) India managing director.
However, the WGC does not expect a repeat of April and May, when imports soared.
According to the finance ministry, India imported 304 tonnes in April and May, two and a half times more than two month’s average, after prices fell more than 10 percent, amid anticipation of further restrictions on gold.
In July, India proposed supply restrictions by tying imports for domestic consumption to exports, and hiked the import duty for a third time to 10 percent in August.
July-September imports may have shrunken to 100 tonnes, the WGC official said, quoting market estimates. Despite this, demand in 2013 could rise to 900-1,000 tonnes from 864 tonnes last year, he said.
Demand for gold is likely to be sustained as more people are expected to demand gold in absence of a bank account in rural areas, which contribute to about 60-70 percent of the demand.
“As we see population growth, as we see more people get out of the poverty line... demand will grow,” Somasundaram said.
The federal government has been asking consumers to refrain from buying gold and estimates gold imports to be at 750-800 tonnes in the year to March 2014.
Gold has always been an integral part of Indian culture and is given as an endowment for marriages and for other auspicious and religious reasons.
According to government estimates, about 137 million households have been lifted out of poverty since 2004-05, leaving more disposable income in the hands of consumers.
“The first thing a person does when the come out of poverty is buy gold. ATM card and bank account comes much later,” Somasundaram said. (Editing by Jason Neely)