As dollar continues to weaken and the marriage seasons is approaching fast, gold prices will firm up by at least 7.15% in next few weeks to reach a level of Rs10,500, predicts industry chamber Assocham. Currently, gold prices hover around Rs 9,800 per 10 gm.
However, in the last one year, return on gold investments have grown by around 34% as a result of which, its imports will grow by 250 tonnes by end of March, Assocham said. The gold imports in FY07 stood around 750 tonnes against its total world production of 2500 tonnes per annum.
The trends have shown that in the last 30 days, return on gold investments have grown by 14% because a very strong perception has been built among gold consuming countries that American economy will continue to remain under the grip of slowdown, it said.
According to the chamber, since economic slowdown in America is unlikely to be arrested in immediate future, its impact will be harsh on dollar which will continue to weaken and rupee become further stronger and thus inspire gold investors, particularly in country like India to invest more in gold for security and safety reasons.
Assocham president Venugopal N Dhoot said that since disposable income of average Indians has gone up significantly as a result of higher GDP, gold has become a preferred choice for those for large number of investors. Since the assessment claims that gold imports in FY08 will be around 1000 tonnes, nearly 700 tonnes of it will go towards jewellery making and remaining 300 tonnes will be used for investment purposes in the form of bars and coins.
India’s production of gold was estimated at 3.05 tonnes during financial year 2006-07 as compared to 3.53 tonnes in the preceding year. By comparison, total gold demand was estimated at 745 tonnes in 2005-06.