Gold imports likely to remain low in Q2: Assocham

Gold imports are likely to remain subdued in the second quarter of this fiscal year, FY14, says a study by the Associated Chambers of Commerce and Industry of India (Assocham).

However, shipments of the precious metal could increase from November onwards with demand rising, following marriage and festival season, the study said.

"Imports in the coming months would remain subdued at least till the marriage season in November-December," it said.

There were huge gold imports in the first two months of this fiscal year. However, the government measures to curb the shipments forced investors to stay away in June, it added.

India, the world's largest consumer of gold, is estimated to have imported about 335 tonnes in the first quarter of this fiscal year. The apex bank and government have taken several measures including hike in import duty to reduce shipments so as to tame current account deficit.

Projecting that gold demand would revive from November, the study said the price of the precious metal could cross Rs 28,000 per 10 grams during the November-December period.

Till then, prices are expected to hover between Rs 26,500 and Rs 27,500 per 10 grams, it said.

Continuing pressure on rupee would also influence domestic gold prices as the landed rates would also increase with currency depreciation, it added.

The study further said the quantity of recycled precious metal would increase for jewellery making in the wake of supply restrictions.

"Hordes of gold coins and medallions collected by the middle class families would find way into the melting furnace of jewellers for meeting the jewellery needs for wedding."

Amid poor awareness about other investment avenues like inflation-linked bonds, the study revealed that gold continues to be the most preferred safe-haven asset for middle income investors in India.