Rural purchases set to boost Indian gold demand

6 May, 2018 12:00 AM printer

Mumbai: Indian gold demand may improve through to December as positive monsoon rains and government efforts to raise farmer incomes could boost rural purchases enough to offset higher prices because of the weak rupee, the World Gold Council (WGC) said.

India is the world's second-biggest gold consumer and higher demand there could support global prices that have risen over 5 per cent since mid-December, although a rise in imports of the metal would widen India's trade deficit, report Agencies.

The government's measures to boost rural incomes by increasing the subsidised prices for food grains and the forecast for a normal monsoon rains in 2018 will bolster demand, Somasundaram PR, the managing director of WGC's Indian operations, said on Thursday. "The aggregate demand in April to December would be higher than last year's three quarters."

Two-thirds of India's gold demand comes from rural areas, where jewellery is a traditional store of wealth. The country is likely to receive average monsoon rains in 2018, the India Meteorological Department said in April, potentially raising farm and economic growth in Asia's third-biggest economy, where half of the farmland lacks irrigation.