India Gold Imports Fall 20% .

MUMBAI -- India's gold imports in the October-December quarter may exceed the year-earlier level of 281 metric tons as wedding-season demand is likely to remain firm despite high prices, the managing director of the World Gold Council's India office said Thursday.

"It's not the time when you can postpone purchase of gold jewelry," Ajay Mitra told reporters after releasing the council's latest quarterly report.

In India, the world's largest gold consumer, the peak wedding season from November through February accounts for nearly half of the total demand. It is considered customary to gift gold to a bride during wedding in the country.

Gold imports by India fell 20% to 200 tons during the July-September period but were up 11% at 753 tons in the first nine months of this year due to higher purchases in the first half of 2011, the council said in its report.

High inflation, coupled with the depreciation of the Indian rupee, accelerated the fall in demand for gold during the last quarter, Mr. Mitra said.

The Indian rupee fell to a more than 31-month intraday low Wednesday against the U.S. dollar. India imports almost all of its gold requirement, and a weak rupee makes imports costlier.

Local gold prices may remain firm due to the weak rupee, Mr. Mitra said. He didn't give any price forecast.

Spot gold prices in Mumbai, the country's biggest bullion trading hub, hit a record 29,270 rupees ($578.4) per 10 grams Wednesday, while overseas prices have come down around 7% from a record of $1,920.94 a troy ounce on Sept. 6.

However, total gold demand in India is still likely to be around 960 tons in 2011, almost the same as last year's, Mr. Mitra said.

"It's not the price, it's the volatility that is the concern."

The precious metal was extremely volatile in September as its price touched an all-time high and then fell as low as $1,560/oz.

Source : online.wsj.com