India gold imports to top 2009 as buyers accept record prices

Gold imports by India this year may exceed 2009's level as near-record prices fail to deter buyers and festivals drive demand in the world's biggest consumer of bullion, according to the National Spot Exchange Ltd.

Purchases may total 600 to 625 tonnes, compared with an estimated 480 tonnes to 485 tonnes bought last year, Anjani Sinha, chief executive officer of the nation's biggest bourse for trading physical gold, said in an interview today in Goa, where he is scheduled to speak at an industry conference.

India's bullion demand almost doubled in the first half of the year even as prices reached a record in June as investors sought a haven and higher salaries spurred jewelry sales, the World Gold Council said this week. Demand in the second half is likely to be at least 25 per cent higher from a year earlier, as the country enters the festival season, Sinha said.

"This level of prices is already accepted, so during this period compared with last year, the demand will be higher," he said. "Last year was the first year when prices went up to this level. This year, prices have been around this level so people feel it might break the all-time high. Indians are not selling gold, they are buying."

Gold in New York has advanced 13 per cent this year, heading for its 10th annual gain, as investors sought to protect their wealth against financial turmoil in Europe and the prospect of currency debasement.

New York futures reached a record $1,266.50 an ounce on June 21 and the immediate-delivery price touched an all-time high of $1,265.30 the same day in London. Futures for December delivery rose 20 cents to settle at $1,237.90 yesterday on the Comex in New York. The metal added 0.7 per cent this week, capping the fourth straight weekly gain.

Price surge
The metal may reach at least $1,300 this year, fuelled by investment demand, said Paul Walker, chief executive officer of London-based researcher GFMS Ltd., in an interview August 27. He spoke at the Goa conference yesterday. Goldman Sachs Group Inc. forecast earlier this month that prices may reach $1,300 in six months and Deutsche Bank AG said June 3 that the metal may surge to $1,700 as currencies slump. The euro fell to a four-year low versus the dollar in June.

Indian imports this year should reach the 2009 level as soon as this month, the World Gold Council said this week. Purchases in the first half were 348 tons, compared with 559 tonnes in all of last year, according to the council's data.

The nation's total gold demand was 365 tonnes in the first six months, up from 188.4 tonnes a year ago, while jewelry demand surged 67 per cent to 272.5 tonnes, according to the council.

India's festival season starts next month and bullion sales usually reach a peak during the Hindu festival of Diwali, which falls on November 5 this year. The wedding season runs from November to December and from late March through early May.