Gold imports in India, the world's largest consumer, are likely to jump 64 per cent to 500-550 tonnes in 2011, driven by investment purchases that are likely to affect world prices, the head of a trade body told Reuters yesterday.
"If prices fall further to Rs 18,000-19,000 ($396-$418) per 10 grams, the import figure will be over 600 tonnes," said Prithviraj Kothari, president of the Bombay Bullion Association, a 400-member strong trade body.
Auspicious days for gold purchases for 2011
"Much would also depend on how monsoon pans out, inflation behaves and performance of the equity markets," Kothari said.
Monsoon rains play an important role in rural areas, which depend on agriculture and allied activities for sustenance and contributes to over 60 per cent of gold demand.
Demand in 2010 had been stronger after a 19 per cent decline in 2009, when the worst monsoon in nearly four decades dented sales.
Traders said the harvesting festival, which would start with pongal in Tamil Nadu, would set a strong pace for gold sales in 2011, followed by the wedding season next month.
Kothari said volumes on the Exchange Traded Funds are likely to jump 4 times to 50-60 tonnes as investors seek a safe hedge against rising inflation and diversify their portfolio to offset losses in the declining stock market. Prices of the yellow metal, which traded at $1,359 an ounce on Friday, are likely to fall to $1,270-1,300 by March-end weighed by a strong dollar overseas, Kothari said.
"This would be due to strong US dollar supported by strong economic indicators," he said. A rising dollar dims the yellow metal's appeal as an alternative investment.
Images: India again sees gold rush
Kothari said the Reserve Bank of India's decision to grant licenses to seven more banks to import bullion is a good sign for the gold trade. RBI has allowed 7 more banks to import gold and silver, taking the total to 30 banks, a move that will smoothen supply.
Karur Vysya Bank, Punjab and Sind Bank, South Indian Bank, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore and State Bank of Travancore, are the new banks that have been given permission, data on RBI's website showed.
The site that promotes the advantages of physical gold particularly the gold dinar as stated in Holy Quran. The coming future, it is hoped that people start to realize its significance and crucial roles that can be played by gold dinar as a stabilizer in economics as well as replacing papers' currency.
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