‘Gold may gain 10% on festival, wedding season’

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Sept. 4 : Gold may gain 10% by the end of the year driven by demand for jewelry during the Indian wedding and festival season, according to data released by JPMorgan Chase & Co. The season has boosted prices every year since 2002 with September being the strongest buying month, JPMorgan analysts led by Brendan James said in a report. Over the past decade, gold has risen by an average of 10.1% from September through to December, according to a study by the broker.

India, the world’s biggest buyer of bullion, increased imports 56% in August, the first monthly gain as price declines boosted jewelry sales. Gold, which has dropped 3.5% in 2008, may rebound because of demand for jewelry in India and the Middle East, the Societe Generale said in August. “We should see prices stabilise and move higher,” Jonathan Barratt, managing director, Commodity Broking Services, Sydney, said on Friday. “This is a seasonal low.” Gold for immediate delivery, snapped a four-day losing streak, rising 0.2% to $802.70 an ounce at 12.39 pm Sydney time. Bullion dropped as low as $772.98 on August 15 after reaching a record $1,030.70 in March. Prices should rise above $830 by the end of 2008, though won’t likely top $900, Commodity Broking’s Barratt said.

Indian demand typically rises in the wedding season, which runs from late September to December. Jewelers also buy the metal for the Hindu festival of Diwali, or the Festival of Light. Gold may climb in the next three months to $900 on demand from investors and the jewelry sector as the value of the dollar declines, UBS AG said last week. “We have undertaken an analysis to determine whether speculation surrounding the effect of the Indian wedding season is real, or simply an urban legend,” James said in the report on Wednesday. “Our analysis indicates that the Indian wedding and festival season has a positive effect on gold prices since 2002. This suggests that we could see a strong recovery in the last four months of 2008.”