by Peter Schiff, Schiff Gold:

Gold imports into India jumped for the first time in seven months in July as jewelers replenished stocks.

Indian gold purchases surged 44.2% year-on-year to 75 tons.

India ranks as the number two consumer of gold in the world. According to a Reuters report, increased demand, “could support global prices,” which are struggling to hold ground in a strong dollar environment.

Low prices encouraged jewelers to buy gold ahead of the international jewelry show, and many Indians may also be buying gold to hedge against a weakening rupee, according to GFMS analyst Cameron Alexander.

Analysts projected Indian demand for gold will surge in the second half of this year. Good monsoon rains should lead to a bountiful harvest and higher minimum support (MSP) for summer crops will put more cash in farmer’s pockets. Analysts expect a 25% increase in demand for the yellow metal compared to the second half of 2017.

Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai, told Reuters he expects imports to remain robust in August as peak festival season approaches.

Demand for gold usually strengthens in the final quarter of the year as India gears up for the wedding season as well as festivals such as Diwali and Dussehra, when buying the precious metal is considered auspicious.”

Gold is interwoven into India’s marriage ceremonies and cultural rites. Indians also value gold as a store of wealth, especially in poor rural regions. Two-thirds of India’s gold demand comes from these areas, where the vast majority of people live outside the official tax system.

Gold is not just a luxury in India. Even poor people buy gold in the Asian nation. According to an ICE 360 survey last year, one in every two households in India purchased gold within the last five years. Overall, 87% of households in the country own some amount of the yellow metal. Even households at the lowest income levels in India own some gold. According to the survey, more than 75% of families in the bottom 10% had managed to buy gold.

Indians consume between 800 and 900 tons of gold annually. Only the Chinese buy more gold. Because of its appetite for the yellow metal, Indian gold demand has an impact on the global market.

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