Although general elections are at least a year away, chances of it to happen sooner due to coalition break ups could hit the markets in a negative way.
NEW DELHI(BullionStreet): General elections, scheduled for 2014 ( if the coalition stays thus far) and the monsoon are the two key factors to drive India’s gold markets in the next few seasons, analysts said.
They said elections are likely to dry up purchases while a good monsoon props it up.
Although general elections are at least a year away, chances of it to happen sooner due to coalition break ups could hit the markets in a negative way, they said.
India's elections, the largest of it's kind in the world, is crucial to country's economy and no major decisions were taken during the time as people awaits for policies of new government.
On the other hand, a normal monsoon forecast by the Indian Met Department has brought a big smile to the Indian gold trade. Rural demand has already picked up as the Akshaya Tritiya is nearing and the news of a normal monsoon has further added fuel to it.
Analysts said farmers are major buyers in rural India and they are buying gold according to their capacity. A good monsoon can bring good harvest and increase their purchasing power.
The crash in the yellow metal price coupled with a forecast of normal monsoon has enthused rural community to go for the precious metal this time around, they added.
Nearly 60% of India's gold is consumed by rural India and monsoon plays a critical role in it. The sentiment is very positive now and they are going in for jewellery in particular.
Bullion dealers are expecting gold imports to be close to 1,000 tonne in 2013 despite a spurt in prices of the yellow metal over the past week. In 2012, the country had imported 864.2 tonne gold.