One can invest in ommodities for which demand spikes during the festive season
INDIANS celebrate a string of festivals between August and November. Then comes the peak marriage season. The result is the rise in demand for some farm commodities and precious metals.
This makes a lot of big investors bet on these in the last five months of the year.
For instance, gold, silver and wheat prices have never fallen between August and December in the last five years. So, as the festive season begins, we bring you the price outlook for commodities for which demand generally rises in this period.
Gold: In the last five festive seasons (August- December), gold prices rose 12.8 per cent in 2009, 15.7 per cent in 2010, 17 per cent in 2011, 2.72 per cent in 2012 and 1.23 per cent in 2013. This year, prices have fallen 3.18 per cent between
" Gold prices slid mainly due to sharp fall in demand.
The demand from
Latest data from the US indicate the economy there is gaining strength. This usually means a rise in demand for US dollars and fall in gold sales. This is because both these assets compete in the global markets for ' safe haven' status.
A rise in demand for one is usually bad news for the other.
Experts say festive demand will rise by 10- 20 per cent in the second half of 2014. " We have seen that even a small recovery in demand in the festival season leads to a rise in prices. But we are not expecting any sharp rise.
Factors that affect gold prices can be classified into traditional and non- traditional. The traditional ones include demand/ supply, buying by central banks and changes in gold ETF (exchangetraded fund) holdings. The nonthe end of 2012, when the Fed began tapering of quantitative easing programme.
Fundamentally, silver lacks impetus as the US economy recovers and its appeal as a safe investment in difficult economic conditions wanes. Also, the market will factor in an early rise in interest rates, which will make many debt instruments more attractive than precious metals. Falling demand in
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