Gold imports may cross 1,000 tn this year

Despite high prices and volatility, a surge in demand is expected during the festival season.

Gold imports are expected to be robust this year, despite a 30 per cent rise in prices. Last year, net imports were 958 tonnes and at least the same level is expected this year.

On a quarter-on-quarter basis, imports slipped by 6.6 per cent, from 286 tonnes to 267 tonnes, in the July-September quarter. However, despite the second quarter being a subdued one traditionally, they rose 68 per cent on a year-on-year basis. The ongoing festival season is likely to see further improvement in numbers.

“The festival season has begun and rural consumption is also likely to remain high due to better agriculture crop this kharif,” said Sanjiv Arole, an independent bullion analyst.

Price volatility had deterred consumers from buying gold. With prices beginning to stabilise at Rs 26,000 per 10g, demand has again picked up in the past couple of weeks, said a trader, leading to more imports. Imports were 563 tonnes in the first two quarters during 2011 but slowed after July. July-September is traditionally a dull quarter for India. Prices also crossed Rs 28,000 per 10g during that period and then came down, correcting nearly 10 per cent from high levels.

“Going by the trend in the first two quarters of 2011 and looking at demand on upcoming festivals, we are bullish on imports,” said Keyur Shah, director, World Gold Council. The Bombay Bullion Association agrees, estimating imports may cross 1,000 tonnes during 2011.

Traders also say the gold with retailers may not be much; else, imports would not have picked up. Sanjiv Arole said the noteworthy thing is that despite prices at very high levels, scrap gold is not coming to the market. Traditionally people were selling old gold when prices were at very high levels.

Experts said their budget had been an issue for consumers because of high prices, but each correction has seen buyers getting back to purchase the yellow metal. And, going by the price outlook, which the majority believes will continue to be high, the gold demand outlook remains bullish.