MUMBAI (Reuters) - India, normally the world's top gold importer, may have turned net exporter in the last few months as Indians melt down their jewellery to catch high prices.
India imported no gold at all in February for the first time, and traders say it probably won't again in March.
In fact, gold now appears to be seeping out of India in the form of gold coins, which allow big traders to skirt restrictions on exports, a trend that underscores the resistance to spot gold prices challenging last year's all-time $1,030.80 high.
"In February and March many people have exported gold...about 6 tonnes may have gone out," said a senior member of a large trade association in Mumbai's gold hub Zaveri Bazaar.
As Indian prices fell below global rates, an arbitrage opened for traders stuck with high stocks in a domestic market awash with gold as scrap sales surged as much as four-fold.
"We exported 100 kgs for the first time last month...it was just enough to make a small profit," the head of a large trading house in New Delhi said.
The dramatic reversal in gold trade partly explained why world prices have been stuck at below $950 an ounce for the past month, despite continued heavy investment in exchange traded funds (ETFs) and several bouts of risk aversion.
It may also pinpoint the pain threshold for Indian consumers, as well as the potential for changing retail behaviour in a rapidly developing economy -- one that may be increasingly sensitive to high prices as the world battles recession.
Source : REUTERS INDIA