With the festive and marriage seasons in India fast approaching and the dollar heading south, gold prices per 10 gm would firm up by at least 7.15% in next few weeks to reach a level of Rs10,500, according to forecast made by the Associated Chambers of Commerce and Industry of India (Assocham).
Currently, domestic gold prices hover around Rs 9,800 per 10 gm. In an assessment on possible prices during Diwali and marriage seasons, Assocham president Venugopal Dhoot said that in last one year, return on gold investments have gone up around 34% as a result of which its imports will grow by 250 tonne by the end of March 31, 2008. Gold imports in fiscal 2006-07 stood around 750 tonne against its total world production of 2,500 tonne per annum. Trends have shown that in the last 30 days, return on gold investments have grown by 14%. This is happening because a very strong perception has been built among gold consuming countries that the American economy will continue to remain under the grip of a slowdown, said the chamber analysis. It further stated that since economic slowdown in America is unlikely to be arrested in the immediate future, its impact will be harsh on the dollar. This will continue to weaken and inspire gold investors in India to invest more in gold for security and safety reasons.
Dhoot also said that since disposable income of average Indians have gone up significantly as a result of higher GDP, gold has become a preferred choice for those for large number of investors.
Since the Assocham assessment claims that gold imports in the fiscal 2007-08 will be around 1000 tonne, nearly 700 tonne of it will go towards jewellery making and remaining 300 tonne will be used for investment purposes in the form of bars and coins.