Gold Imports May Cross 1,000 Tonne, Touch New High.

India’s gold imports may head for a record in 2011 despite a weakening rupee that has made overseas purchases dearer, as more disposable incomes and volatile stock markets have driven demand for haven assets, according to top industry executives.

Gold imports by India, the world’s largest consumer, may cross 1,000 tonne in 2011, compared with 958 tonne a year before, said Prithviraj Kothari, the president of the Bombay Bullion Association.

Some industry executives had forecast gold imports in 2011 to reach around last year’s level, but recent hammering of stock markets across the globe due to worsening macro-economic outlook in the US and Europe have forced investors to side with the haven appeal of gold.

The country usually imports around 700 tonne to 800 tonne of gold a year, although high inflation and more rural income following good monsoon rains pushed up demand for overseas purchases in 2010.

Kothari said robust demand during the peak festival season, which started on Wednesday, will push up import requirements, although the rupee has depreciated by more than 8% in September alone to hover around a 28-month low.

The country imported around 550 tonne of gold in the first half of the calender year 2011, Kothari added.

A Mumbai-based trader said marriage season demand, high inflation and uncertainties about global economy will keep demand for gold high. “The recent fall in prices has given an opportunity to buyers, who were deferring purchases due to high prices, to start buying, hoping that the prices will soar again on strong demand,” he said.

In Singapore, spot gold rose by $12.40 an ounce to $1,626.45 an ounce by 0636 GMT, but still is heading for a monthly dip of 11%.

Gold started advancing at a faster pace since the first week of August as worries mounted about the state of global economy after Standard and Poor’s cut the top-notch credit rating for the US and the debt crisis aggravated in Europe, and has since maintained a volatile movement.

Earlier this week, Kothari said a price range of R25,500 to R26,000 per 10 grams will be a reasonable bet this season although the rupee has weakened.

The plentiful showers this year has brightened farm income prospects this year, providing fresh impetus to rural demand for gold, he said, adding that the high inflation level, too, will drive people towards gold as a hedge. Gold has given an average of more than 20% returns in the past four years, reflecting its consistency as a haven asset.

Tradition-bound Indians scale up gold buying during the festival season considering it auspicious, and marriages, too, add to the demand. Around one million marriages are held in the country each year, mostly during this period.

Source : financialexpress.com