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Fall in gold price in India cuts scrap sales by half

08-16-2012 14:23 BJT

KOLKATA, India, Aug. 16 (Xinhua) -- With Indian gold price touching a low of 27,468 rupees (499 U.S. dollars) per 10 grams Thursday, scrap sales of gold have dwindled by almost 50 percent in the Indian market.

Buyers are slowly returning to the market mostly in the coin and bar space. The demand in gold jewellery is expected to pick up only in October when the festive season begins again, say jewellers.

Kapil Kumar, partner of Chokshi Arvind Jewellers in Mumbai's Zaveri Bazar, said: "Suddenly, there is a drop in scrap sales as sellers are waiting for a fresh price upswing. People have already liquidated scrap in the second quarter. They will wait to sell more scrap when prices go up. Unless there is an immediate emergency, people are not selling gold."

Mukesh Kothari, director, RiddiSiddhi Bullion, too agreed, saying: "We had seen scrap sales of gold going up after the yellow metal went up. But beginning July, there has been a gradual drop in scrap sales. And in the last one week, there has been a drastic drop in scrap sales. We estimate that scrap sales has fallen by 50 to 75 percent this month."

Incidentally, rising scrap sales and a weak rupee had pushed down imports of gold in the first half of this year. Imports in the second quarter to June are estimated to have fallen by 55 percent to 135 tonne, gold trade officials said. In the first two quarters, India is estimated to have imported 27 billion U.S. dollars of gold, broadly in line with the government's target.

The Indian government wants to cut gold imports to 38 billion U. S. dollars in the fiscal year to March 2013, down 38 percent on the year to help rein in a bulging current account deficit. "Buyers are gradually returning to the market and sales are expected to pick from July end. Jewellers and bullion dealers have started buying gold for the India International Jewellery Show which will be held in the last week of August," said Kumar.

Kothai said,"In the meantime gold buyers, who are largely investors in the yellow metal, have started picking up gold coins and bars in small volumes. This is a good sign for the gold trade which has gone through very lull period in last two months."

Editor:James |Source: Xinhua

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