Gold Price Dip to Boost Indian Festive Demand

SEATTLE (Scrap Monster): The dip in gold prices to lowest level in seven months is likely to boost demand for the yellow metal, especially for coins and ornaments, during the upcoming festive season.

According to Suvankar Sen, managing director of Kolkata-based Senco Gold Ltd., the overall market sentiment continues to remain positive. The price drop for gold has come at the best time for the market. Footfalls have recorded notable increase. The festive gold demand this year is expected to be 10% to 15% higher than the previous year, Sen added.

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The domestic gold prices have dropped significantly by around 7% from the peak hit in May. The geopolitical tensions in the Middle East region have arrested the free fall in gold prices. However, declaration of higher rates by the U.S. Federal Reserve will turn out to be negative for gold.

Chirag Sheth, principal consultant with Metals Focus Ltd noted that demand is likely to remain flat this year, in contrast to earlier projections of a sharp dip in demand. The prices at the current levels or slightly lower levels may trigger increased gold sales during the festive season. However, a declining currency could make gold expensive in the country, which in turn may impact sales, he added.