Gold demand may pick up in second half of 2016, say experts

Mumbai, Aug 17 (PTI) Global economic crisis willcontinue to drive the demand for gold and silver worldwide,with appetite for the yellow metal likely to pick up in Indiain the second half of 2016 on the back of festive season andPay Commission award, industry experts said. The demand for gold in the domestic market is expectedto pick up in the second half of 2016 after a dismal firsthalf, they said. High unofficial imports, elevated price, imposition ofexcise duty and subsequent strike by jewellers had impactedgold demand in the first half. "Demand is expected to come back and price discountsare expected to narrow from October. "The overall demand is expected to remain around 380to 400 tonnes for the second half of calendar year 2016 onaccount of increase in farmer incomes, salary arrears toCentral government employees under 7th Pay Commission andfestive demand," Foretell Business Solutions, Head of BullionResearch, Debajit Saha said in a statement here. He added that gold demand remained extremely poor inthe first half of the current year. Market had entered intodeep discount zone, impacting official supply of gold.Discounts increased the moment government announced levy ofexcise duty, which prompted jewellers to go on a long strike,he said. Announcement of excise duty and the subsequent strikelead to destocking at jewellers’ end. Unanticipated increasein price of gold in early 2016 pushed domestic prices anddrove demand out further, besides increasing scrap flows, thestatement added. Sudheesh Nambiath of Thomson Reuters GFMS said goldprice in India could decline and find support at Rs 29,000/10gm and later rise towards Rs 33,500 by middle of next year. Lack of physical demand from Asia, increased scrapselling at higher price levels and stable Indian rupee will bekey factors that can help put some pressure on domesticprices, he added. PTI AP RSY ABMBAS