Last week’s two percent decline in spot gold prices is not discouraging gold bulls who’re turning their sights on Asian demand, which they say remains resilient and is set to strengthen on seasonal buying from India.
However, softer economic growth from Asia’s third-largest economy, a depreciating Indian rupee and limits placed on gold imports aimed at reducing U.S. dollar outflows in a bid to improve the trade gap and narrow the current account deficit may mean the tone of celebrations – and gold purchases – from the world’s biggest gold consumer are a little less extravagant this season.
“Indian wedding season demand will support the trade but it is likely to be much more subdued in terms of price impact this year,” said Victor Thianpriya, Commodity Strategist at ANZ Research in Singapore. “Import restrictions remain in place and dealers are likely to source more from the scrap market.”
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