Gold at $1,300 may crimp Indian imports.

India's gold imports almost doubled in the first half of this year, boosted by a good monsoon and pent-up demand from the previous year when a drought hit consumers' spending capacity.

The real test of consumer appetite will come in the second half when India's festival season tend to encourage a spending spree, though much will depend on what happens to the gold price .

Following are three scenarios on future gold prices and their impact on imports, posited by industry players at a conference in Varca in India's western state of Goa.

Gold prices hovering around current levels would lead to higher purchases at festivals and imports could rise by 10-25% year on year, industry members said.

"As the monsoon is good, rural buyers should demand more gold," Ved Prakash, marketing director at MMTC Ltd said. "And we have been seeing good investment demand for gold (from people saving) for marriages and education."

Gold above USD1,300/oz

Gold at USD 1,300 would mean a new high in the foreign markets and would lead to new highs in the local market as well. This could bring down import growth to a range of 10-15%.

"High prices would give a bit of pullback in (rising) imports as customers would take time to accept the high level," Naveen Mathur, associate director, Angel Commodities said.

Gold below USD 1,200/oz

Gold below this level would be welcomed by Indians and they might revise upwards the volume they planned to purchase, possibly boosting imports by over 25%.

"At every fall there will be (fresh) demand," said a gold dealer in a large bank who could not be named due to company policy.

Source : moneycontrol.com