|By Arabian Post Staff| It is a double whammy for gold this Thursday. The metal was trading near its lowest in nearly six years while Reuters reported from Mumbai that third-quarter gold buying in India, the world’s biggest consumer, is likely to fall to the lowest level in eight years.
Gold is hurt by poor investment demand as the dollar held at multi-month highs after U.S. economic data reinforced expectations of an interest rate rise this year. The drop in demand in India is also attributed to back-to-back droughts that have slashed earnings for the country’s millions of farmers.
Gold had seen some safe-haven bids earlier in the week after Turkey downed a Russian fighter jet, stoking tensions between the two countries, but have faded since as investors’ focus returned to a U.S. rate rise.
In the physical markets, buying interest picked up as gold prices stayed near multi-year lows.
The sluggish demand could halve imports by India in U.S. dollar terms in the final quarter, a retailer and two bank dealers said, putting further pressure on global prices that hit a five-year low earlier this month.
December quarter demand could fall to 150 to 175 tonnes, said Bachhraj Bamalwa, a director with the All India Gems & Jewellery Trade Federation, from 201.6 tonnes a year ago and a five-year average for the quarter of 231 tonnes, according to World Gold Council data.
The December quarter usually accounts for about a third of India’s gold sales as it takes in the start of the wedding season as well as festivals like Dhanteras and Diwali, when buying gold is considered auspicious.