truthingold.com / By truthing / March 19, 2013, 06:32
Indian gold funds are shrinking for the first time since June as investors in the biggest bullion- consuming nation follow billionaire George Soros in pulling money from products backed by the precious metal.
Exchange-traded funds in gold saw outflows of 80 million rupees ($1.5 million), data from the Association of Mutual Funds in India show. Investments in sovereign-debt funds rose by 4.46 billion rupees, the sixth straight month of inflows. Gold prices in India have slid 4.3 percent this year, while rupee bonds returned 2.7 percent, the second-highest gains in Asia.
“Globally we are seeing a decelerating gold trend, and overweight investors will be adjusting asset allocations,” Lakshmi Iyer, Mumbai-based head of fixed income and products at Kotak Mahindra Asset Management Co., which oversees about $6 billion of assets, said in a March 14 telephone interview. “We should see some interest-rate easing over the next two or three quarters,” encouraging people to seek capital gains in bonds, she added.
Soros cut his holdings in SPDR Gold Trust, the largest exchange-traded gold product, by 55 percent last quarter, and Goldman Sachs Group Inc. predicts the metal’s 12-year rally will end as a U.S. economic recovery gathers momentum. The Reserve Bank of India will lower its benchmark repurchase rate to 7.50 percent from 7.75 percent today, according to 30 of 35 economists in a Bloomberg survey. Five predict no change.