Gold Imports By India Reach Record On Jewelry Sales, Group Says.

Gold imports by India, the largest user, climbed to a record in 2010, driven by a surge in jewelry demand and amid expectations that the 10-year rally in prices would extend, according to the World Gold Council.

Purchases totaled 918 metric tons, according to provisional data released by the producer-funded group today. That exceeds the projection of about 800 tons made last month by Ajay Mitra, the group’s managing director for India and the Middle East.

Bullion advanced 30 percent last year, reaching a record $1,431.25 an ounce on Dec. 7, as investors bought the metal as a protector of wealth. Jewelry demand in India jumped 69 percent in the year to the highest ever, helping drive global demand to a 10-year peak, according to the council.

“India was the strongest growth market in 2010,” said the report. “The rising price of gold, particularly in the latter half of the year, created a ‘virtuous circle’ of higher price expectations among Indian consumers, which fuelled purchases, thereby further driving up local prices.”

Fourth-quarter imports rose to 265 tons from 204 tons a year earlier, the group said. Jewelry demand gained 47 percent to 210.5 tons, while total demand in the period climbed 37 percent to 284.9 tons.

Consumer demand for bullion in India rallied 66 percent in 2010 to 963.1 tons by volume from a year earlier and more than doubled in value to $38.2 billion, the council said.

Source : bloomberg.com