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Gold/Mining/Energy : JAB International (JABI) -- Ignore unavailable to you. Want to Upgrade?

To: GOLDIGER who wrote (433)	10/25/1997 8:30:00 PM
From: Jeffery E. Forrest	Respond to of 4571

India gold falls, but festival demand averts crash By Dev Varam BOMBAY, Oct 25 (Reuters) - Gold prices fell sharply in panic selling in India, the world's largest consumer of the yellow metal as gold crashed to a 12-year low in world markets, dealers and analysts said on Saturday. They said standard gold (24 carat) lost 100 rupees or 2.3 percent per 10 grammes to 4,270 rupees in Bombay, India's commercial capital and its main bullion market. ''A 100 rupee fall does not amount to a crash. The real crash in India is yet to come. It's staved off for the time being by festival demand,'' said Vijay Kapoor, a leading gold jeweller. India is preparing to celebrate Diwali, the Hindu festival of lights, on October 30, when traditionally demand for gold and silver scales to new highs. ''There is a lot of panic in the market. But most of it was neutralised by festival demand,'' Kapoor said. ''We are waiting for Diwali to be over to see Indian prices finding their level.'' ''But the fall in gold prices at a time when Diwali is so close is a rare phenomenon,'' Kapoor said. In New York, spot gold prices fell about five percent on Friday to new 12-year lows to end at $308.75/25 an ounce, compared to the London Friday afternoon fix at $316.65. The crash followed news that the Swiss planned to sell part of their gold reserves, estimated at 1,400 tonnes, from 1999, which analysts said would keep world gold markets nervous. Bullion analyst Madhusudan Daga said he expected Indian demand for gold to remain stable because the end of Diwali coincided with the start of the traditional wedding season. ''The wedding season lasting three months will sustain the demand for gold,'' Daga said. Kapoor said he saw the chances of gold prices recovering as traders in Dubai, the Gulf re-export market that feeds Indian demand for gold, had quoted $314 per ounce on Saturday. Some bullion dealers however, did not agree with this view. ''Any recovery in world markets will be short-lived. I expect world gold prices to go under $300 dollars, perhaps to around $280 in due course,'' said Bhayabhai Sanghavi, a leading dealer in Bombay. ''In India, there is festival buying. So the market is having some support,'' he said. ''But after Diwali, there will be a crash.'' India's annual gold consumption is estimated at around 500 tonnes a year, more than 300 tonnes of which are met through imports and the rest from recycled gold within the country. The country produces a mere two tonnes a year from its dying and uneconomic mines in the south. India's bullion market has turned soft after the government further liberalised its gold import policy on October 16. The policy allows three state-run agencies and eight banks to import and sell gold freely to both exporters of jewellery and local dealers. Currently, jewellery exporters get their gold supply against orders from importers abroad and local dealers pay a premium to acquire special import licences (SIL) to buy gold and silver. Dealers said the SIL premium fell to 8.5 percent on Saturday from 11.5 percent on the previous day, indicating demand from importers of gold to take advantage of low world prices. ''When more more imports arrive, prices are going to get depressed further,'' said Sanghavi. ''I dont see any sign of recovery after that for quite some time.''