MUMBAI: India’s December gold imports are likely to spurt to 15-20 tonnes from 3 tonnes a year earlier, mainly on the back of the wedding season demand and easing prices, the head of the Bombay Bullion Association said.
Gold jewellery forms the main dowry basket at Indian weddings and is the main driver of gold demand in the world’s second-most populous country.
“If prices stay as they are, wedding demand would help India in importing 15-20 tonnes this month,” Suresh Hundia, president of the Bombay Bullion Association said in an interview. The wedding season runs till the end of December. Gold imports have been muted this year as record high prices boosted supplies of scrap gold, mainly old jewellery or bar holdings within households. This domestic supply met local needs, keeping higher priced imports at bay.
According to the Bombay Bullion Association, India provisionally imported 173.4 tonnes of gold till November and Mr Hundia expects full-year imports at 200-220 tonnes as against 420 tonnes in 2008.
Mr Hundia said the sale of scrap gold could have risen to 200-250 tonnes in 2009 from 150 tonnes last year. Households in India are estimated to have 20,000 tonnes of gold mainly in the form of jewellery, according to trade estimates. Gold prices have been on a record-breaking spree this year denting demand significantly in the price sensitive country.
Mr Hundia said he expected average gold price in the domestic market to be at Rs 15,500 ($332) per 10 grams in 2010, while, for overseas gold, he saw an average price of $960 an ounce. “The way prices have gone up, it may come down any time,” Mr Hundia said.
The benchmark February gold contract of the Multi Commodity Exchange of India traded at Rs 17,179 per 10 grams, down 1.5% from the previous day, but up 39% from a year ago. Last week, the contract hit a record Rs 18,364.
High prices also weakened silver consumption, said Mr Hundia, who also actively trades in the white metal. He estimated silver imports were likely between 800 and 1,000 tonnes in 2009 from 2,800 tonnes in 2008.
Source : The Economic Times