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Retail investment in gold on a roll

Retail investment in gold on a roll
J PADMAPRIYA
TIMES NEWS NETWORK[ SATURDAY, FEBRUARY 25, 2006 12:09:54 AM]

HYDERABAD: India’s love for gold jewellery is legendary. Indians increasingly now seem to hoard the yellow metal as retail investment in the forms of bars and coins.

This trend, ind-ustry watchers say, would lead to development and buoyant offtake of products like gold futures and gold traded mutual funds.

According to the World Gold Council’s global statistics for ’05, India’s consumer demand for retail investments in gold has jumped 34% to touch 134.7 tonne in ’05 against 100.2 tonne in ’04.

India’s demand for gold jewellery stood at 589 tonne in ’05 against 517.5 tonne in ’04, registering a rise of 14%. Total global gold consumption stood at 3,754 tonne in ’05 against 3,504 tonne in ’04, the data said.

Globally too, the offtake for gold as retail investment in the form of coins, bars and mutual funds has been on an upswing accounting for nearly 600 tonne consumption in ’05 against 476 tonne in ’04.

According to Sanjeev Agarwal, MD, WGC (Indian sub-continent), “jewellery continues to remain the significant portion of gold demand in India. However, there has been an upswing in investment trends in gold. On an average, there has been a 15% rise in gold investment in the last few years”.

Mr Agarwal says, India is warming up to the need for gold investment products like mutual funds. Several mutual funds, in fact, are working on such products. Gold mutual funds are expected to hit the market in the second quarter of ’06, he added.

According to the WGC consumer demand tre-nds in India, “while jewellery demand may have been constrained in the first weeks of ’06, a period of price stability is likely to see a strong level of buying once again”.

The buoyancy is expected on account of a strong economic forecast and demographic indicators in key markets.


LINK: http://economictimes.indiatimes.com/articleshow/1427976.cms