MUMBAI: Gold imports and sales in India, one of the largest consumers and importers of the yellow metal in the world, may pick up in April-May, bullion dealers said on Sunday.
Skyrocketing gold prices have overheated the Indian bullion market, resulting in lower imports and sales in January and in the first two weeks of February. Bombay Bullion Association figures said that gold imports to India dipped to 1.8 tons in January 2009 against the 18 tons in the same period last year. In 2008, India’s gold imports dipped by 45 per cent to touch 450 tons. In February this year, there has been practically no gold imports so far, said the Association.
”Gold sales have fallen in February and there was practically no import of the yellow metal in February. There are more sellers for gold rather than buyers in the market these days,” Arun Vardhan, a gold dealer in Mumbai told Commodity Online.
Last week, gold prices zoomed to a historic high of Rs 15,000/- per ten grams in India, thanks to the rising prices of the yellow metal in the global markets and the fall in equities and currency markets.
Bullion dealers have predicted that gold imports to India could collapse to the lowest in the decade if gold prices continue to rise in the coming months. But despite the gloom in the gold market, Vardhan said that gold imports and sales in India could go up during April-May months.
”April and May are the months of summer wedding season and then there is the Hindu religious festival of Akshaya Tritiya coming. So gold sales could pick up. Gold imports can go up only if sales happen,” Vardhan pointed out.
The World Gold Council has also predicted there will be a modest gain in gold purchases in India during the summer wedding season and the Hindu religious festival of Akshaya Tritiya. “There will be a modest growth of 10-15 per cent in the Indian domestic jewellery business,” said K Shivram, Vice-President, World Gold Council.
Shivram said that gold sales will pick in April-May-June after the dull season of December and January. In the last eight years from 2000, gold imports to India every year have been between 400-800 tons.
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.
According to Suresh Hundia, President, Bombay Bullion Association, gold sales and demand have dropped to negligible levels because of high prices. “Gold and jewellery sector is reeling under a crisis because of high prices and retrenchments across sectors,” he said. Gold prices which in December was from Rs 13,505 for10 grams moved to an all-time high of Rs 15,000 per ten grams last week. Analysts have predicted that gold prices could zoom to Rs 16,000 per ten grams by April this year
Inspite of the fall in demand, gold prices have moved up as investors found heaven in the yellow metal on fear of deflation. But even though investment in gold looks attractive, many investors have been struggling for survival after they lost money in commodities and equity markets.
Harish Galipalli, Head of Research, Karvy Commodities, says gold prices could zoom to higher levels because of the dollar-euro movements on weak economic fundamentals. “Gold prices are only going to up in future,” he said.
Source : www.commodityonline.com