India Gold - Customer Zone - Reuters

COMMODITIES GOLD GOLD: REBOUNDS WILL RISK SHIVER BATTERED AVERSION ON JAPAN AFTER BY BANISH DEBT SHARPEST U.S. CREDIT DOWNGRADE CORRECTION LOSS DOWNGRADE SINCE DESPITE FEARS? MAY CORRECTION FEARS AUGUST 2011
Local prices are up more than 41 percent on a year ago. "People are thinking of almost double prices compared to last year,"
said Daman Prakash Rathod, director with Chennai-based gold wholesaler MNC Bullion.
But, he added, "in the coming months, strong seasonal impact will not allow any let up on the import front."
India's obsession with gold is nowhere more evident than in its wedding season, which runs from September to December,
when jewellery and gilded gifts abound as brides traditionally carry their wealth while sons inherit land and fixed assets.
Rural consumers -- many of whom invest in gold as they live far from the facilities of a bank -- will be looking to monsoon
rains expected to be only slightly below normal to give a good crop and so boost incomes and saving capacity.
INVESTMENT SPUR?
Traders say rising awareness among India's 1.2 billion population of the investment avenues in gold due to the large presence
of commodity, stock brokers and mutual fund houses in smaller towns has supported buying to save.
"Globalisation of media and better reach to every nook and corner of India through mobile (phones), cable TV have made a
dramatic difference to customer preference," said MNC's Rathod.
Investment in gold bars and coins rose eight percent in the quarter to March to 85.6 tonnes, with investment in exchange
traded funds jumping 57 percent to 15.077 tonnes in February on a year ago -- small amounts but a significant shift. Still, with
foreign players not allowed in commodities markets in India, there are limits to liquidity, crimping participation from hedge
players and others who want nimble trading.
The conference could see price forecasts from Scotia Mocatta, a unit of Canada-based Bank of Nova Scotia, State Bank of India,
Religare Commodities, and GFMS, which was recently acquired by Thomson Reuters.
Industry participants will also be hoping the Reserve Bank of India (RBI), the country's central bank , will give approval for forward
contracts in silver and loans for traders, along with an exchange traded fund for the metal.
"This facility should be there for flexibility in business operations. We are depriving (silver traders) of benefits and cashing in
on lower prices. If we have these facilities for gold traders, then why not for silver?" said Mayank Khemka, managing director
with Khemka Group of Companies, one of the speakers at the conference.
A forward contract is a non-standardized agreement between two parties to buy or sell an asset at a specified future time at a
price agreed today. Khemka said they intend to take up the issue with the RBI in September.
Participants will be also watching how India's regional rival and neighbour China, which the World Gold Council says will overtake
India this year in terms of gold consumption in the short-term, is coping with regulatory changes that allow more companies
to deal in precious metal and what lessons traders back home can draw from them.
Gold a 'bubble that could deflate,' says analyst
KOVALAM, India, Aug 20 (Reuters) -
R ecord
gold prices may be heading for a correction of about 8 percent next month, but the safe-haven metal may also
rally to $2,400 an ounce next year as investors seek refuge amid global economic turmoil, a global head at INTL
FCStone on Saturday.
"Trees don't grow till heaven. I think buyers need to be beware we are in a 'caveat emptor' market," said Jeffrey Rhodes,
global head of precious metals at the brokerage and an industry expert, told reporters at a conference on gold in the
southern Indian state of Kerala.
International gold struck a record of $1,877 an ounce on Friday, still on track for its biggest one-month rise in nearly 12 years in
August and its biggest one-week gain since early 2009.
Rhodes said gold may retrace to $1,725 by next month, and then race ahead. "My problem is that people are buying gold and
they don't understand why they are buying gold and that's a big problem and that is a classic symptom of a bubble," said Rhodes.
Rhodes said there is an absence of "real motivation" for investors to cash in their gold holdings to cover losses from the equity
markets.
On Friday, global equity markets slid anew and gold set a second-straight record high as fears of a possible U.S. slide into
recession and concerns related to Europe's debt crisis kept investors on edge.
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