Gold imports by India, one of the largest yellow metal consuming nations in the world, is likely to go up in 2010 thanks to falling gold prices and rising demand for the precious metal these days.
According to bullion traders and officials at the Bombay Bullion Association (BBA), gold demand across Indian cities and towns is picking up. “Stockists are buying more gold these days as the price of the yellow metal has cooled down,” said Nripen Shah, a bullion dealer in Mumbai’s Zaveri Bazaar.
“I think the physical trading in gold will be much better in 2010 compared to 2009. Last year, the very fact that gold price was hitting through the roof made common people, investors and traders panicky. People could not digest the fact about the historic high price in gold. Now, gold price has cooled off there is brisk sales happening across the country,” Shah said.
In November last year, gold price had touched a historic high of Rs 18,000 per ten grams in the Indian spot and futures markets. On Monday, gold price traded at Rs 16580 per ten grams in the futures market on the largest commodity bourse, the Multi Commodity Exchange of India (MCX).
Based on the rising demand for gold these days, BBA officials said that gold imports by India in 2010 will be much better than 2009. “We expect gold imports by India to substantially rise in 2010 compared to the figures in 2009. This is mainly because gold price has now cooled off, and there is good physical demand for the yellow metal,” BBA president Suresh Hundia said.
Hundia said that the total gold import during January rose to a three-month high at 37 tonnes as compared with 27 tonnes in December and 30 tonnes in November 2009. In October, however, gold’s arrival into the country was recorded at 48 tonnes on occasional demand from retail jewellers.
According to BBA, India imported 343 metric tons of gold in 2009, which is 18% less than the yellow metal the country imported in 2008. The fall in gold imports in 2009 led to an increase in scrap sales that touched around 200 tons last year.
BBA says this year the scrap gold sales will fall to anything between 70 to 100 tons.
National Spot Exchange Ltd, India’s top commodity bourse for trading physical bullion, says the households in India have nearly 22,000 tons of gold locked away in family vaults. This makes India one of the largest stockists of physical gold in the world.
In the global bullion market, the external environment represented by broader market concerns and movements of currencies led by the dollar continues to impact on gold. Last weekend, in London the PM Fix was at $1,082 an ounce, up a tad from $ 1,076.25/oz the previous day.
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