Indian gold demand will recover

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Indian gold demand will recover
Allan Seccombe
Posted: Thu, 18 Jan 2007

[miningmx.com] -- INDIAN demand for gold is expected to recover in early 2007 after a dramatic fall last year as high prices and volatility kept buyers out of the market, GFMS said in its Gold Survey 2006 � Update 2.

�We are forecasting that world fabrication will be little changed on the back of just a one percent fall in jewellery. This may appear surprising given that we also expect gold prices to move higher and remain fairly volatile, but India should bounce back, following a collapse during the first half of last year,� GFMS CEO Paul Walker said in a statement.

Demand for gold in the jewellery sector fell by 440 tonnes, with India, Italy and Turkey accounting for more than half of that, GFMS said.

�The sharp fall in India last year followed one of the worst January to June performances on record,� Walker said.

Jewellery demand, excluding scrap, showed a 24% decline, marking an 18-year low for new gold demand in the global jewellery fabrication business, he added.

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GFMS forecast the gold price to move higher in coming months, and Walker said it could reach $670 in the first half of 2007.

�It is less certain we will see the recent high of $725 surpassed,� he said. �That could still occur, maybe further into the year or possibly in 2008, especially if the situation in the Middle East deteriorates significantly, driving oil prices higher.�

Central bank sales are seen slowing further in 2007 from an already muted performance in 2006, when net sales by the banks halved to 330 tonnes because of reduced sales by those belonging to the Central Bank Gold Agreement and small-scale buying by central banks outside Europe.

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