India gold demand to revive in second half

Indian jewelry demand would also rise as there are more days considered lucky for weddings in the second half. (Reuters)
Updated 02 August 2018
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India gold demand to revive in second half

  • Higher demand from the world’s second-biggest gold consumer could support global prices
  • Despite the fall, the WGC maintained a 2018 demand estimate of between 700 and 800 tons versus 763.4 tons last year

MUMBAI: Indian gold demand is set to improve in the second half of 2018, after falling 6 percent in the first half, as government steps to boost farmers’ incomes are expected to lift rural buying power, the World Gold Council (WGC) said on Thursday.
Higher demand from the world’s second-biggest gold consumer could support global prices that are trading near their lowest in a year, although a rise in imports of the precious metal would widen India’s trade deficit.
A hike in crop prices and farm loan waivers would improve rural demand in the second half of the year, Somasundaram PR, managing director of WGC’s Indian operations, told Reuters.
Two-thirds of India’s gold demand comes from rural areas, where jewelry is a traditional store of wealth.
India last month raised the government-mandated price for summer-sown crops such as rice and cotton by the most since Prime Minister Narendra Modi came to power in 2014, a move that analysts said was aimed at wooing millions of poor farmers ahead of a general election next year.
In the April-June quarter, Indian gold demand fell 8 percent from a year ago to 187.2 tons, hit by a rally in local prices due to a depreciating rupee, the WGC said in a report published on Thursday.
Despite the fall, the WGC maintained a 2018 demand estimate of between 700 and 800 tons versus 763.4 tons last year.
“If the monsoon delivers lower rainfall then we may end at the lower end of the range,” Somasundaram said.
India’s demand has averaged 840 tons a year over the last decade.
India is likely to receive below-normal monsoon rains this year, a weather forecaster said on Wednesday, raising concerns over farm output and economic growth in Asia’s third-biggest economy, where half the farmland lacks irrigation.
Investment gold demand fell 9 percent in the first half of 2018 from a year ago to 71.6 tons as the stock market was giving better returns than bullion, WGC said.
In the second half also, investment demand will remain under pressure as a rise in interest rates makes bank deposits attractive for some investors, Somasundaram said.
The Reserve Bank of India raised interest rates for its second straight meeting on Wednesday.
Jewelry demand would also rise as there are more days considered lucky for weddings in the second half, Somasundaram said. Gold is an essential part of a bride’s dowry in India and a popular gift from family and guests at weddings.
Spot gold was holding near $1,220 an ounce on Thursday, not far off a one-year low hit in mid-July at $1,211.08.


Tesla rival Lucid Motors wants to build factory in Saudi Arabia

Updated 19 min 3 sec ago
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Tesla rival Lucid Motors wants to build factory in Saudi Arabia

  • Lucid Motors eyes production plant in Kingdom after raising more than $1bn from the Public Investment Fund
  • California-based electric-car maker hopes to sell first vehicles for more than $100,000 

LONDON: A US-based electric-vehicle company that raised more than $1 billion from Saudi Arabia wants to build a factory in the Kingdom, and says its mission to build “the best car in the world” is well underway. 

The California-based Lucid Motors is developing its first model, the Air, which it hopes to sell for more than $100,000 when it enters production in less than two years’ time. 

Financial backing from Saudi Arabia’s Public Investment Fund (PIF), announced last year, will allow Lucid to proceed with the development of the all-electric sedan, as well as fund the $240 million cost of building the first phase of its factory in the US.

Peter Rawlinson, chief technology officer at Lucid Motors — and a former engineer at rival Tesla — said the company wants to eventually build a production plant in Saudi Arabia, and sees a “long-term” partnership with the Kingdom.

“I can see a really bright future, with a tangible manufacturing facility or facilities,” Rawlinson told Arab News.

“We’d love to do that … We’re currently in a period where we are investigating all these options. 

“There is a vision that there will be some sort of production facility in the future.”

Rawlinson added that it is “early days” for such a plan, but said he sees many opportunities for electric vehicles in Saudi Arabia — not least, because of the abundant sunshine and potential for solar power.

“We are undertaking the appropriate studies, but I’m really excited about the potential of this. This partnership is huge for us; we can benefit the Kingdom of Saudi Arabia in a significant, meaningful and long-term manner,” he said. 

“One of the great assets of the Kingdom is its endless reserves of sunshine, and how that can be harvested with solar energy. We’re a battery-storage technology company; that’s a way we could contribute. We’re exploring a number of avenues along those lines.”

Lucid is positioning itself in the luxury market, and Rawlinson said its Air model is looking to compete with the likes of the Mercedes-Benz S-Class. The Lucid Air is the company’s first car, but Rawlinson said an initial public offering (IPO) could be on the cards to develop future models.

The engineer brushed off the idea of a competitive threat from Elon Musk’s Tesla, where he once worked as chief engineer for the Model S.

“We don’t see Tesla as a key, direct competitor. We see the German gasoline cars — the petrol engine cars … as our core competitive set,” he said. 

“I’ve spoken to many people … who would gladly buy an electric car but say they’re not going to give up their Mercedes-Benz to buy a Tesla because of the interior. You’ve only got to step inside a Tesla to realize it’s not true luxury.”