Capital Gold Group Report: Gold May Gain 10% on Indian Weddings, JPMorgan Says

By Jesse Riseborough

Sept. 4 (Bloomberg) -- Gold may gain 10 percent by the end of the year driven by demand for jewelry during the Indian wedding and festival season, according to JPMorgan Chase & Co. data.

The season has boosted prices every year since 2002 with September the strongest buying month, JPMorgan analysts led by Brendan James said in a report. Over the past decade, gold has risen by an average of 10.1 percent from September through to December, according to a study by the broker.

India, the world's biggest buyer of bullion, increased imports 56 percent last month, the first monthly gain in 11 as price declines boosted jewelry sales. Gold, which has dropped 3.5 percent this year, may rebound because of demand for jewelry in India and the Middle East, Societe Generale said last month.

``We should see prices stabilize and move higher,'' Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said today by phone. ``This is a seasonal low.''

``We have undertaken an analysis to determine whether speculation surrounding the effect of the Indian wedding season is real, or simply an urban legend,'' James said in the report yesterday. ``Our analysis indicates that the Indian wedding and festival season has had a positive effect on the gold price since 2002. This suggests that we could see a strong recovery in the gold price in the last four months of 2008.''

By the end of August, in the past 10 years, the gold price has been up 3.2 percent on average from the start of the year, according to JPMorgan's analysis. By the end of September, this has increased to 8.2 percent on average. From September to the end of December, the price has continued to gain, averaging a 13.3 percent annual gain, it said.