India gold demand (Diwali)

[pmbug]

Looks like gold demand in India is charging full speed ahead:

Yesterday the Indian gold price rose 30 rupees to hit a new record high of 29,296 rupees per 10 grams. But rising prices are not scaring investors away - Indians keep transferring their funds to precious metals. The silver price also benefited from this trend, rising 150 rupees to consolidate at 58.000 rupees per kilo.

During the five days of Diwali, the Indian festival of light, gold and silver price registered record sales. But buying interest has not declined. Now that the wedding season has started, Indian gold dealers and jewellers continue to sell large quantities of precious metals. Furthermore, in recent weeks Indian investors have been withdrawing large sums of capital from bond and investment funds, since they expect that in coming weeks stock markets will continue to be under sales pressure. Large amounts of this capital is obviously flowing into the gold and silver markets. ...
...

More: http://www.goldmoney.com/gold-research/roman-baudzus/gold-price-hits-new-record-high-in-india.html

 

[Unobtanium]

Great post PMBug. Can you explain though how the Indian gold price hit a record high while the USD gold price still remains reasonably below its all time high?

Is the Indian gold market decoupled from the US/London/Asian market? Or does it have to do with the relative price of the rupee with respect to the dollar?

 

[Island_Dweller]

Mr Unobtanium,

I'm guessing you're not an FX trader.....haha. Dude, currencies trade against each other and therefore it's possible (and happens every day) for the price of gold (or any other commodity) to go down in US dollars but go up in another currency. All that has to happen is for the currency in question to fall against the US dollar (in percentage terms) more than gold falls against the US dollar..

The best way to get a handle on it is to randomly pick a currency other than the US dollar and watch it from day to day and then you'll understand.

Cheers, ID

 

[Unobtanium]

Mr Unobtanium,

I'm guessing you're not an FX trader.....haha. Dude, currencies trade against each other and therefore it's possible (and happens every day) for the price of gold (or any other commodity) to go down in US dollars but go up in another currency. All that has to happen is for the currency in question to fall against the US dollar (in percentage terms) more than gold falls against the US dollar..

Cheers, ID

Thanks for the info Island. Definitely not an FX trader here. I thought it might have something to do with the relative currency values, so thanks for confirming that.

And BTW, welcome to the forum, it is nice to have you aboard.

 

[DCFusor]

While I'm no currency trader, I do watch. Due to my psychology and trading tool set, I find that owning just a little (could be way less the 1% of my stuff) makes me watch it a lot closer - something 'bout skin in the game even if it's only a few not quite dead skin cells.

Lately, that something regarding currencies has been EUO, which is short the EURUSD cross.

 

[Island_Dweller]

And BTW, welcome to the forum, it is nice to have you aboard.

Thanks! I'm always looking for places to talk PMs. Just ditched my old place (got sick of the fighting and name-calling due to differences of opinion). I want to hang out at a place where people can learn and trade ideas and name calling is kept to a minimum.

Cheers

 

[Steven Douglas]

This underscores a strange phenomenon in my mind - one of perception and illusion. Even though we are locked into forced acceptance of a fiat currency (as payment of taxes and debts), the fact that the US dollar is the world's reserve currency (soon to end), and so much foreign currency is "backed" or valued by US dollar holdings, it makes us like the First Class passengers aboard the Titanic. Everyone may wish they were not beholden to the dollar, but many (like China) are forced to grit their teeth and prop it up for their own survival.

Our twisted economic game of musical chairs (where more players are added, rather than chairs removed, in an every expanding circle of claimants on a limited number of chairs) is unusual here: What can cause the music to stop altogether, with a mad implosion to the middle by everyone? A contraction of the dollar, as the credit stops expanding. Greece and Iceland can implode and it poses a financial strain on the European economy, but if the dollar implodes - and that is unavoidable in the long term - everything else implodes along with it, as all are sucked into the same, massive black hole.

Add to that the fact that other fiat Ponzi schemes are far more leveraged than us means a likelihood of greater time to funnel our currency holdings into what really is a finite number of value-retaining life rafts - and all because a faster drop on the part of a fellow skydiver can look like a "rise" on the parts of those who don't fall quite as fast.

 

[dontdeBasemebro]

And BTW, welcome to the forum, it is nice to have you aboard.

Thanks! I'm always looking for places to talk PMs. Just ditched my old place (got sick of the fighting and name-calling due to differences of opinion). I want to hang out at a place where people can learn and trade ideas and name calling is kept to a minimum.

Cheers

Welcome and glad you found your way here.

 

[pmbug]

A sharp drop in the value of the rupee against the US dollar in early November helped to moderate Indian demand for gold and silver during the tailend of the Diwali festival of light, according to new market analysis.

... In addition to this recent rise in precious metal prices, operators and investors are less enthusiastic about buying as the outlook on global economic growth keeps getting worse. Due to the devaluation of the rupee recently many investors have withdrawn their capital from Indian stock markets, causing stock prices to fall. The European banking and sovereign debt crisis also gave foreign investors further reasons to repatriate their capital. As a consecuence, India's stock markets have been under pressure.
...
In this eventuality, it would be tough for the emerging markets not to suffer from a collapse in demand from the developed world. The fallout from the bursting of the Chinese real estate bubble could also cause serious problems for the global economy. A slight decrease of Asian demand could cause metal prices to drop further, thus offering investors excellent buying opportunities at an attractive price level. ...

More: http://www.goldmoney.com/gold-research/roman-baudzus/indian-precious-metal-sales-fall.html

 

[ancona]

If Europe implodes on us, and the Eurozone reverts to treaditional national currencies, the dollar will blast up over 90 - 95, and PM's will get sent to the woodshed. However, we will have a unique opportunity to buy them on the cheap for as long as the dollar can keep it's pants on. I would say we could see a three month super rally in the dollar, but when the realization sinks in about our debt, and just how unsustainable it is, it will quickly crash out, permitting PM's to explode.

Just my humble opinion.

 

[pmbug]

I think supply stress will make taking advantage of the dollar's strength vs. paper gold difficult. By the time it becomes that great a bargain, you will be hard pressed to find anyone selling large quantites of physical gold and silver.

 

[DCFusor]

Looks like PMs are going to the woodshed right now. I don't think the dollar going up in that measure is the reason - they are going down relative to oil too. My system would have you sell your non core holdings at this point, at a loss - it happens. I'm not sure I will this time. Looks like someone had to raise more cash than people wanted gold right then or something like that. That's usually "transitory"

 

[DSAbug]

Looks like PMs are going to the woodshed right now. I don't think the dollar going up in that measure is the reason - they are going down relative to oil too. My system would have you sell your non core holdings at this point, at a loss - it happens. I'm not sure I will this time. Looks like someone had to raise more cash than people wanted gold right then or something like that. That's usually "transitory"

To me.. it looks like we just had to fill the gap up for the GDX + GDXJ from last week while gold tests the lower rising lows line. Personally, I don't like seeing us test the lower end of that triangle. Definitely makes me worried about future selling.

What we really need today is a cleanup in gold and the shares. Prolonged selling into the end of the week wouldn't be good.

 

[pmbug]

There is some unintentional comedy in this article (bolded parts - emphasis mine):

That Indian households hold the yellow metal close to their heart is a known fact. A new report indicates that the gold close to every Indian's heart and in most homes could be well over $950 billion, which in turn is around 50% of the country's GDP in dollar terms.

Gold consumption is part of India's culture and tradition. At $950 billion, the hoarding represents 11% of the global stock, the report has said, making India one of the largest private gold holders in the world.

Indian households hold 18,000 tonnes of gold, says global research firm Macquarie. In a report, the firm has noted that bars, coins and other modes of retail investment during 2011 have also reported a 90% increase, which are all testimony to the untamed demand for the yellow metal in India.
...
WORRIED ECONOMISTS

However, the Indian mentality to hold on to their precious tonnage has got many economists worried. ...

India's yellow metal fetish is threatening to take the shine off its fast paced economic growth, with many economists saying that financial markets are losing out on funds that have instead been spent on gold.

"The 18,000 tonnes of metal in Indian households is almost double the gold reserves maintained by the US Federal Reserve. And it just sits idle in family vaults across India as ornaments, bars and coins,'' said an analyst with a brokerage firm.

Y Venugopal Reddy, a former governor of the India's central bank, the Reserve Bank of India, has said that it has created an incurable `drain on savings', threatening to hobble economic progress. As gold fever grips most households in India, the country's household savings rate has plummeted in the financial year that ended on March 31 to 9.7% of GDP, compared with 12.1% in the previous fiscal year.

Moreover, with the central bank raising interest rates more than 12 times since March last year to combat double digit inflation, domestic deposits and fixed income investments have been looking increasingly vulnerable. The Bombay Stock Exchange benchmark Sensex has also fallen more than 16% till September and since the start of 2011.
...

More: http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=141012&sn=Detail&pid=102055

Keynesian economists and central bankers really derped it up there.

 

[ancona]

The bank runs are already underway in Europe. Greece is an open run, but Spain, Portugal and Italy are under the radar runs for now. If Frau Merkel and Sarko can't shake that knot loose and do it soon, we will be witness to all hell breaking loose.

 

[mmerlinn]

Bottom line: Indian inflation of the rupee is fueling high gold prices and high accumulations of gold in India. Or maybe it would be better to say that flight to gold in India indicates that the government is debasing the Indian Rupee.

 

[pmbug]

* necro bump *

Record crowds during India’s most important celebration on Sunday could potentially be positive news for the gold market.

Sunday, millions of people in India and around the world celebrated Diwali, the Hindu festival of light. The five-day festival is an important event for the global gold market as India is one of the world’s top gold-consuming nations and the precious metal is often given as a gift during the holidays.

Even before the record turnouts throughout India, analysts were expecting this year’s celebration to have a solid impact on gold demand.
...

More:

Analysts optimistic for solid gold demand during record Diwali celebrations

(Kitco News) - Record crowds during India’s most important celebration on Sunday could potentially be positive news for the gold market.

www.kitco.com

 

[searcher]

Nov 17 (Reuters) - Indian buyers brushed off record high local prices this week making gold purchases during the Diwali festival week in the country, while China premiums remained buoyant after the top-buyer continued to accumulate gold holdings.

Asia Gold Indians brush off record rates to load up on gold for Diwali

Indian buyers brushed off record high local prices this week making gold purchases during the Diwali festival week in the country, while China premiums remained buoyant after the top-buyer continued to accumulate gold holdings.

www.reuters.com

 

[pmbug]

Sounds nice, but the report lacks hard numbers.

 

[nickndfl]

Plus they pay a national tax on gold purchases driving the price higher.

 

[pmbug]

Some numbers:

India's October gold imports surged 60% from a year earlier to a 31-month high as a drop in prices ahead of a key festival prompted jewellers to ramp up purchases, a government source said on Monday.

Higher imports by the world's second-biggest bullion consumer could support benchmark gold prices XAU=, but may also widen India's trade deficit and put pressure on the ailing rupee INR=D4.

India imported 123 metric tons of gold in October, compared with 77 tons a year earlier, the source said, declining to be named as he is not authorised to speak to the media.

The average monthly imports in October in the past decade were around 66 tons.
...

https://www.nasdaq.com/articles/indias-oct-gold-imports-surge-to-31-month-high-on-festive-demand

~2x normal for the month of October seems like a lot.

 

[pmbug]

Physical gold dealers in India were forced to offer steeper discounts this week as record high prices accelerated a post-festival slowdown in demand, with the rise in local prices hurting activity in other Asian hubs as well.

Indian dealers offered discounts of up to $9 an ounce over official domestic prices inclusive of 15% import and 3% sales levies up from the last week’s discounts of $6.

Demand was good for a few days after the Diwali festival last month, but rising prices have brought the market to a standstill, a New Delhi-based bullion dealer said.
...

More:

Record high gold prices add to post-festival lull in India demand

Demand was good for a few days after the Diwali festival last month, but rising prices have brought the market to a standstill, a New Delhi-based bullion dealer said.

www.moneycontrol.com

 

[Peter89]

India's gold demand to rise in 2024

Higher purchases in the world's second-biggest gold consumer could support prices , which are trading near record highs.

India's gold demand has been stuck between 700 and 800 metric tons in the past five years, but it is expected to break out of this range and rise to between 800 and 900 tons in 2024, Somasundaram P.R., CEO of WGC's Indian operations told Reuters.

"Given the fact that high prices have now been absorbed and economic growth is robust, demand is resetting its base to 800 to 900 tons," he said.


China = 1st gold consumer
India = 2nd gold consumer
After the upcoming world currency reset they will become... 2 world superpowers!

 

[searcher]

India’s gold market update: muted consumption demand​

Posted 14 February, 2024

Highlights:​

• After setting a record close in 2023, gold prices retreated and ended January 1.2% down at US$2,053/oz.1 The strong US dollar, high bond yields and fund outflows from global ETFs were contributing factors.
• Domestic Indian price of gold saw a similar decline to international prices owing to the relative stability of the domestic currency. Notwithstanding the moderation, the landed price of gold hovered around INR62,600/10g.2
• The domestic gold price began to trade at a premium relative to international price in late January, following nearly three months of trading at a discount.
• The RBI made the highest monthly gold purchase in eighteen months in January following two months of pause in buying.
• Indian gold ETFs have seen consistent inflows for the last 10 months. January saw US$66.7mn (Rs6.5bn) in net inflows – the highest since August.
• Gold imports both in value and volume terms have moderated following the spike in October weighed down by high prices and soft demand for gold jewelry.

More:

India’s gold market update: muted consumption demand

International and domestic gold prices alike retreated in January. Prices nevertheless remain high and this has been impacting gold jewellery demand in India. Gold imports too have moderated. Domestic gold prices began to trade at a premium to international prices since late January following...

www.gold.org

 

[Peter89]

monthly record for silver imports into India

India imports 2200 tons of silver in February (approx 70 mil oz), after total imports in 2022 were 3,625 tons.
After 2 months India is at almost 3,000 tons, with the annual record being 9600 tons in 2022.

In 1 single month - February - India imported 7-8% of 2023 global production.
On an annual basis India is importing the whole 2023 global production.
That doesn't make any sense.
I have no idea where this amount of silver is coming from

 

[Peter89]

I read that options can get canceled - among others - in case of "market disorder".

When this happened what happened with nickel calls?
Did they get canceled?
If not, calls' holders are still partying

 

[searcher]

Exclusive: India's March gold imports set to drop 90% as prices surge-sources​

MUMBAI, March 27 (Reuters) - India's gold imports are set to plunge by more than 90% in March from the previous month to hit their lowest level since the COVID pandemic as banks cut imports after record-high prices hit demand, a government official and two bank dealers told Reuters.

Lower imports by India, the world's second biggest consumer of the precious metal, could limit a rally in global prices that hit a record high earlier this month on expectations that the Federal Reserve will cut interest rates this year.

The drop in imports could also help India narrow its trade deficit and support the rupee .

India's gold imports are likely to fall to 10 to 11 metric tons in March from 110 metric tons in February, said a government official, who declined to be named as he was not authorized to talk to the media.

Gold imports in March 2024 are expected to be the lowest since the COVID pandemic, when air traffic restrictions limited imports and lockdowns led to the closure of jewelry shops.

More:

Exclusive: India's March gold imports set to drop 90% as prices surge-sources

India's gold imports are set to plunge by more than 90% in March from the previous month to hit their lowest level since the COVID pandemic as banks cut imports after record-high prices hit demand, a government official and two bank dealers told Reuters.

www.reuters.com

 

[Peter89]

Lower imports by India, the world's second biggest consumer of the precious metal, could limit a rally in global prices

It doesn't look like that

"The Indians didn’t drive up the price."

China Has Taken Over Gold Price Control from the West | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[pmbug]

You have to take those charts with a grain of salt. India monkeys around with import tariffs too much and a lot of their gold imports are smuggled in off the books. That's how we get awesome stories like the one that "smuggled a coffee machine in his rectum". Even so, I do concede the point that China's gold imports appear to be much more significant than India's.

 

[pmbug]

* bump *

Even with prices at record highs, Gujarat saw a surge in gold imports in April. According to data from the Ahmedabad Air Cargo Complex, gold imports in April 2024 stood at 3.5 metric tonne (MT). This was a 372% increase from 0.74 MT in March. ...

Gold imports surge 372% in April, Gujarat leads the way | Ahmedabad News - Times of India

Gold imports in April 2024 spiked by 372% in Gujarat despite high prices, driven by tensions and investor anticipation. Central banks continue to procure gold as a hedge against inflation, with prices expected to hold around Rs 72,000. Traditional jewellery demand dampened by high prices.

timesofindia.indiatimes.com

 

[pmbug]

Perhaps emblematic of the times over there in India...

As the auspicious occasion of Akshaya Tritiya approaches, quick commerce platforms are gearing up to provide customers with a seamless experience of acquiring gold and silver coins within 10 minutes. bigbasket, Swiggy Instamart, and Zepto have all announced partnerships with brands to facilitate the swift delivery of precious metals to customers across India.
...

Akshaya Tritiya 2024: How to get gold and silver coins in 10 minutes?

This Akshaya Tritiya, bigbasket, Swiggy Instamart, and Zepto have all announced partnerships with brands to facilitate the swift delivery of precious metals to customers across India.

www.cnbctv18.com

 

[pmbug]

Report from a week ago (or so) indicates that gold demand in India might have slowed down in May:

India's gold imports in 2024 could fall by nearly a fifth from the previous year, as record high prices spur retail consumers to exchange old jewellery for new items, the head of an industry body told Reuters.

Lower imports by India, the world's second biggest consumer of the precious metal, could cap a rally that carried global prices to a record this week.

"Affordability is severely affected by the rapid price increase," said Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA). "Retail buyers prefer exchanging old jewellery for new."
...

https://www.reuters.com/markets/commodities/indias-gold-imports-seen-falling-record-price-prompts-jewellery-swaps-2024-05-22/

 

[nickndfl]

They import so much gold and silvervit affects a trade imbalance. Since their currency loses 10-15% annually the heavy importation is a problem. The government also levy a heavy tax on gold imports, but people pay it or smuggle it.

 

[searcher]

India slashes import tax on gold, silver to tackle smuggling​

MUMBAI, July 23 (Reuters) - India slashed import duties on gold and silver on Tuesday in a move industry officials said could lift retail demand and help cut smuggling in the world's second-biggest bullion consumer.

Higher demand for gold from India could boost global prices, which hit a record high this year, although that could widen India's trade deficit and put pressure on its ailing rupee.

"It's a massive step in (the) right direction, as it will reduce the incentives for smuggling of gold. It will create a level playing field for honest industry stakeholders," said Sachin Jain, CEO of World Gold Council's Indian operations.

More:

https://www.reuters.com/markets/commodities/india-slashes-import-tax-gold-silver-6-2024-07-23/

 

[searcher]

Import Tax Cut Boosts Indian Gold Demand

India's recent gold import tax cut lowered prices and spurred demand for the yellow metal.

goldseek.com