By Rujun Shen
HONG KONG, Nov 13 (Reuters) - India's gold demand is
expected to recover next year, largely due to an expected
increase in jewellery purchases after a difficult 2012 during
which sales dropped due to higher import taxes and a weak rupee,
industry officials said on Tuesday.
An increase in auspicious days for weddings in 2013 - a key
factor driving gold jewellery purchases in the world's top gold
consumer - will help boost demand by 25 percent on the year,
said Shekhar Bhandari, executive vice president of treasury at
Mumbai-based Kotak Mahindra Bank.
This year, jewellery demand fell by 35 percent compared to
2011, he said on the sidelines of a metals conference in Hong
"In 2013 there will be 23 percent more wedding days than
this year," Bhandari added.
China is on its way to overtaking India as the world's top
gold consumer this year, as a weak rupee and higher import tax
weigh on buying interest from India while China's gold
consumption remains resilient.
India's government raised duties on gold imports to curb
imports to $38 billion in the current fiscal year from $58
billion in 2011/12 as it seeks to rein in its current account
deficit and encourage money tied up in gold back into the
Some bankers said they expected the rupee to strengthen
against the U.S. dollar next year, which would make gold more
"We should see recovery next year. We expect rupee to
strengthen which would make domestic prices lower," said Kamal
Naqvi, managing director of commodities at Credit Suisse.
Bhandari said he saw the rupee trading at an average of
52.75 against the dollar in 2013, compared to 54.9 rupees now
Last week, the head of the Bombay Bullion Association, a
leading trade body, said he did not expect the government to
further increase import duties for gold in the next budget,
likely in February.
Association head Mohit Kamboj also said India's gold imports
may fall to 550 tonnes next year from a peak of 967 tonnes in
2011, after a drop that could be as steep as 45 percent this
(Editing by Miral Fahmy)