The impact of India’s Monsoon Season on Gold and Silver Demand
Anticipating an exceptionally strong monsoon in 2024, with precipitation levels expected to surpass the long-term average.
In 2023, India experienced below-average rainfall, impacting agricultural production and consequently, the incomes of individuals involved in the sector. However, projections for 2024 indicate a 106 percent precipitation level, which could lead to a rise in the demand for gold and silver, particularly in jewelry, due to the direct correlation with agricultural prosperity. The La Niña condition is also expected to have a positive influence on the monsoon season.
Rainfall in India predominantly occurs during the monsoon season from June to September, with around 80 to 90 percent of the precipitation happening during this period. A significant portion of Indian farmers, about 45 percent, rely on rain for their crops.
With approximately 65 percent of the Indian population residing in rural areas, where nearly half of them depend on agriculture for their livelihood, the impact of the monsoon on their income and subsequently on the demand for precious metals is substantial. In contrast to 2023, when insufficient rainfall led to a decline in demand for gold and silver, a prosperous monsoon in 2024 could potentially boost the consumption of these metals.
Moreover, the rural economy in India seems to be showing signs of recovery, evident in the increased sales of two-wheelers in rural areas and the government’s announcement of a wage hike for workers in the rural employment guarantee program. These positive indicators hint at a potential upturn in the demand for precious metals in the country.
Investment Opportunities in Gold Companies
For investors looking to capitalize on the potential rise in gold demand, focusing on gold companies, particularly those in the royalty sector, could be a viable strategy. Companies like Gold Royalty and Osisko Gold Royalties have shown promise in this field.
In North and South America, Gold Royalty – – operates streams and royalties in the gold sector, providing investors with diversification opportunities.
Osisko Gold Royalties – – distinguishes itself with a portfolio of over 180 royalties and streams in gold and copper. The recent increase in their quarterly dividend further solidifies their position in the market.
For the latest updates and press releases from Osisko Gold Royalties (- -) and Gold Royalty (- -), investors can stay informed.
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### Insight: Economic Impacts of Monsoon Season in India
The monsoon season in India plays a crucial role in shaping the country’s economy, particularly in sectors such as agriculture and consumer behavior. The anticipated strong monsoon in 2024 is expected to boost agricultural production, leading to increased incomes for rural populations and potentially driving up demand for precious metals like gold and silver, which are often seen as safe-haven assets during times of economic uncertainty. This cyclical relationship between monsoon patterns and economic indicators underscores the importance of understanding natural factors in financial decision-making.
