India’s 2011 Gold Imports Could Reach 1,000 Tons Despite Record Prices.

Notwithstanding Rupee prices of gold striking record highs lately, gold imports into India, the world's largest consumer of the yellow metal, could reach 1,000 tonnes for 2011.

"This year, jewelry demand has fallen... but investment demand has compensated for that," Rajan Venkatesh, managing director of India bullion at The Bank of Nova Scotia, told reporters attending the Federation of Indian Chambers of Commerce and Industry's 'Gems and Jewellery Conference' in Mumbai.

In 2010, India imported about 958 tons of the precious metal.

The weak Rupee has pushed gold prices in India to record levels, thus made jewelry purchases to decline. This however has been offset by gold investment demand, Venkatesh said.

On Thursday, gold futures in India eased due to a rebound in the rupee, but local spot demand remained weak, even in the midst of India's wedding season, as buyers sought further correction.

"Traders think prices are too high. They are waiting for correction. Demand from jewelers was also weak," a Mumbai-based dealer told Reuters.

The wedding season, held annually from September to December, is traditionally a moment for splurging on gold. Gold jewelry purchases in India account for more than 60 per cent of total demand. This year, however, it has failed to bolster demand substantially as consumers diverted more to bars, coins and exchange traded funds over the past few months.

"Investor demand has compensated the decline in the jewelry consumption. The rising Gold Prices, which has boosted the investors' appetite, may result in close to 1000 tonnes imports of the yellow metal," Venkatesh said.

Earlier this month, Rupee gold prices hit a record high Rs29,295 per 10 grams.

According to the World Gold Council's latest "Gold Demand Trends," total jewelry demand for the first nine months of the year dropped to 464.4 metric tonnes from 471.9 tons a year ago, while investment demand grew 26 per cent on year to 296 tonnes.

Indian gold consumer demand in the third quarter of the year was 203.3 tonnes. Total Indian gold demand for the first three quarters of 2011 was 743.4 tonnes, the World Gold Council noted.

Source : au.ibtimes.com