MUMBAI: Even as gold prices surged to a historic, record high of Rs 15,200 per ten grams in India, the import of the yellow metal plunged to the lowest in the country.
Gold prices zoomed to a record high at Rs 15,200 per 10 gram in the Indian bullion market on Tuesday thanks to frantic purchases by stockists and dealers in the wake of the yellow metal crossing 7-month high in global markets. Gold surged by Rs 360 to Rs 15,200 per 10 gram, a historic level in India, solely driven by a rally in overseas markets.
But at the same time, despite the skyrocketing prices, India, the largest importer and consumer of gold in the world, on Tuesday reported that gold imports to the country has been zero in February.
The Bombay Bullion Association, the apex gold trade body in India, said that India’s gold imports have plunged by the lowest of low levels in the first two weeks of February. “There has been zero gold imports to India in February. Whatever gold is being sold is out of the old stocks,” the Association president Suresh Hundia said.
He said gold sales and demand have dropped to poor levels because of high prices. “Gold and jewellery sectors are reeling under a crisis because of high prices and retrenchments across sectors,” he added.
In January, gold imports to India had fallen by more than an unprecedented 90 percent. The Association figures said gold imported dipped to a paltry 1.2 tonnes in January 2009 compared to the 18 tonnes in January 2008.
The Association said following high prices and the global meltdown impact, physical buying of god has been hit hard in India. India's imports of gold have seen a drastic fall.
Gold import has also come down in India because of the fall in demand. Gold imports in India for 2008 dipped almost 47% to 402 tonnes.
Experts blamed high prices for the huge fall in gold imports. The December 2008 gold imports stood at only 3 tonnes against 16 tonnes in December 2007.
In the last eight years from 2000, gold imports to India every year have been between 400-800 tons. Analysts say that gold imports to India this year could collapse to 100 tons, if the current trend continues. It will not be a surprise if gold imports fall to an all-time low of 100 tons or below in 2009.
High prices, global economic meltdown and financial crunch among investors and bullion dealers led to low demand for gold in India, where yellow metal is considered the best safe haven investment and people buy gold for weddings and other ceremonies.
The economic turmoil has also hit the demand for luxury goods and hence the demand for jewellery has fallen considerably. Buying remained dull and prices remained high on global cues.
Although the gold market fundamentals look excellent, investors have been struggling for survival and in this attempt have sold even their gold and silver positions.
Source : www.commodityonline.com