New Delhi, Apr 15 (KNN) The sharp drop in gold prices augurs well for India’s gems and jewellery exports because lower cost of the raw materials will make their final products competitive in the western markets.

India meets almost all its gold requirements through imports for the gems and jewellery sector, which has manufacturing hubs in places like Surat in Gujarat employing 34 lakhs of workers.

In 2012-13 India exported USD 39 billion worth of gems and jewellery but was finding it tough in the western market where demand slowed down.

“The falling price of gold is good for gold exporters as this will reduce the price of the raw materials which will further decrease the cost of the final product.  Hence, the demand for gold will surge,” said Regional Director of Jaipur, Gems and Jewellery Export Promotion Council, Sanjay Singh.

However, he said that for the current export, the scenario was not good as it would incur loss to exporters who have already bought raw material at a higher cost.

Indian gold futures hit 27,100 rupees per 10 grams on today, their lowest level since December 31, 2011 and about 17 per cent down from their peak of 32,464 rupees struck in November last year.

Investment bank Goldman Sachs originally thought gold prices would peak in the middle of 2013 but now believes that the value of bullion will decline to USD 1200 (Rs 64,800) an ounce over the course of the next few years.

There has been overall selling globally by banks and exchange traded funds (ETFs). This is largely because of the optimistic news and data trickling in about an improvement in the U.S. economy.

Internationally, investors have been pulling out of gold and opting for property, equity and fixed deposits where the interest rates have improved.

Back home, this has come as a blessing for customers as the wedding season has begun in India and will continue until early June.  Akshay Tritiya, the second biggest gold buying festival after Dhanteras, also falls in this period. (KNN)