MUMBAI: All these years, India prided itself as the world’s biggest gold importer. But it looks as countries like China are going to overtake India in the import of gold, India in turn is turning an exporter of gold.
According to the Bombay Bullion Association, India managed to export about 9 tonnes of gold coins in February and March. "India's domestic gold prices were about 3 to 4 percent lower than the import cost. So some of the traders bought gold from the local markets and converted them into coins and exported it," the Association said.
The Reserve bank of India restricts gold exports by traders in bullion market as its impacts the partially convertible rupee.
Last week, the Association reported that for a second month in row, India imported no gold, even though the country is the world’s largest consumer of the yellow metal.
”Part from high gold prices, people seem to have pushed forward their plans to purchase jewellery due to the growing uncertainty in global and Indian markets which has led to large scale retrenchments across sectors,” says economic analyst Manasee S. Gokhale who works with India’s second largest commodity bourse the National Commodity and Derivatives Exchange.
He said March has been the second month where not a single tonne of gold has been imported in March against the 21 tonnes of gold imports during the same period last year.
Imports of the yellow metal to India—the largest consumer and importers of gold in the world—are all set plunge to the lowest levels for the decade in 2009.
In 2008, India’s gold imports dipped by 45 per cent to touch 450 tons. Bullion analysts have already predicted earlier this month that if gold imports continue to be sluggish, India’s gold imports will fall 380 tonnes in 2009.
”Gold imports are plunging thanks to the economic conditions that India is finding in these days. We expect overall imports below 380 tonnes for 2009," Vishal Patel, sales trader, India and Middle East, Commerzbank International, had told Commodity Online early this month.
Analysts like Patel and the Bombay Bullion Association (BBA) said that for the first time in this decade, gold imports to India are going to take a big hit.
Gold imports to the country had plunged to zero levels, as no bank and trading houses imported any gold during the month of February. “March has followed February in gold imports. There have been hardly any gold import this month because of the slump in bullion market thanks to high prices of the yellow metal,” BBA president Suresh Hundia had told Commodity Online last week.
He said gold prices ruling at a high of over Rs 15,000 per 10 gram level is the main deterrent for plunging sales that has resulted in zero gold import to India.
“Gold import during March is going to be almost zero due to absence of any demand because of high prices. If there is reduction in price, we may witness some imports,” Hundia said.
In February, there was no gold import at all, while it stood at 21 tonnes in March 2008 and at 23 tonnes in February last year.
Hundia said, unless gold prices come down to Rs 13,500 per 10 grams level, there will be no demand to support import. Gold prices on Tuesday declined by Rs 50 to Rs 15,200 per 10 gram level in the spot markets from its previous day's close.
Gold is no longer glittering in India, the biggest global market for the consumption and imports of the yellow metal.
Buying of gold jewellery has fallen sharply in January and February leading to a slump in the yellow metal’s imports.
In the last eight years from 2000, gold imports to India every year have been between 400-800 tons. But trade bodies have warned that gold imports this year could collapse to 100 tons, if the current trend continues.
High prices, global economic meltdown and financial crunch among investors and bullion dealers led to low demand for gold in India, where yellow metal is considered the best safe haven investment and people buy gold for weddings and other ceremonies.
They also say that if this lowest level of gold intake continues in India, 2009 will be the worst year in this decade as far as gold imports are concerned.
Source : www.commodityonline.com