India 2011 Gold Outlook Bright: WGC.

MUMBAI: India's gold demand outlook is positive after a near 30 percent jump in imports last quarter, although the government could decide to raise import duty in its February 28 budget, a World Gold Council (WGC) director said.

"The outlook is positive. The year has begun well, January this year is better than January 2010. Demand will be robust," Ajay Mitra, WGC managing director, Middle East and India, told journalists on Thursday as the WGC launched its annual outlook.

India's net gold imports rose nearly 30 percent in the October to December quarter, the report showed, as buyers in the world's biggest consumer were undeterred by high global prices.

"We had a very robust Q4 compared with other Asian countries and the west. We have seen robust demand in the ETF sector," Mitra said, adding Indian consumers opted for gold even at higher prices.

The most-active domestically traded contract for April touched a record 21,101 rupees per 10 gram in early December. International gold prices climbed 30 percent last year.

India's share of global demand, which stood at 16 percent in 2009, rose to 25 percent this year and it is also the biggest buyer of gold jewellery with a 20 percent share of the market.

For the quarter ended December 31, India's gold jewellery demand rose 47 percent to 210.5 tonnes from a year ago, the WGC data showed.

Now the winter harvesting season is underway which should mean rural households have more disposable income, helping to boost significantly gold demand. The traditional Indian marriage season has also started and will last through to May.

Mitra said the government could decide to raise import duty on gold again in its next budget, which should be announced on February 28. India has already hiked import duty on gold twice in the last two years.

"The government of India is likely to increase import duty, given the fact that 2010 has such robust numbers," said Mitra.

Source : economictimes.indiatimes.com