India’s Import of Gold may Fall on High Prices .

MELBOURNE: Gold imports by India are poised to decline for the first time in three years as rising prices deter jewellery buyers and investors, potentially allowing China to overtake the country as the world’s largest consumer.

Purchases may drop 7 per cent to 900 metric tonnes this year, says the median estimate of eight analysts, brokers and jewellers including Rajesh Exports, the biggest gold-jewellery exporter. India bought a record 969 tonnes in 2011, according to the World Gold Council.

Bullion is climbing for the twelfth year as investors seek to protect their wealth from volatility in stock markets, depreciating currencies and the threat of inflation.

China’s demand, which surged 20 per cent to 769.8 tonnes in 2011, may surpass India’s consumption this year, the council said on February 16. Demand in India fell 7 per cent to 933.4 tonnes after prices rallied to a record as the local currency slumped to an all-time low against the dollar.

“With the prices of gold going up, nothing fits into the budget of the customer,” Ramesh Pahlajani, partner at Mumbai-based Bherumal Shamandas Jewellers, said in an interview. “Demand for gold has been quite subdued.”

Marriage demand
Imports plunged 44 per cent in the fourth quarter to 157 tonnes as jewellery demand slumped 44 per cent to 103 tonnes and investment demand declined 38 per cent to 70 tonnes, the council said. Bullion futures in India rallied 32 per cent last year, exceeding the 10 per cent advance in global prices.

In India, gold is traditionally bought during festival seasons and for marriages as part of the bridal trousseau. The number of days this year considered to be auspicious for weddings will be the fewest since 2004, potentially trimming gold demand, Ajay Mitra, managing director, Middle East and India at the council, has said.

“The amount of gold I buy has been reduced and we have to budget our expenses,” said Khushboo Jain, 24, while shopping in Zaveri Bazaar, Mumbai’s main jewellery market, ahead of her April wedding. “I am buying for my marriage and in the future it will be an investment for me in times of financial crisis.”

Every household
Gold for immediate delivery was little changed at $1,735.45 an ounce in Mumbai yesterday. The metal reached a record $1,921.15 an ounce in September.

“Gold is still something that every household believes in owning,” said S. Subramaniam, chief financial officer at Titan Industries, India’s biggest retailer of gold jewellery. “Gold is not just about an ornament or adornment, it’s about investment as well.”

Gold holdings in exchange-traded products were 2,388.683 tonnes on February 17, near the record 2,392.976 tonnes reached on December 13, according to data.

In India, investors held a record Rs96.14 billion in funds backed by gold as of January 31, according to the Association of Mutual Funds in India data.

“Demand in India has been slow as expenses have been rising because of inflation,” Rakesh Jain, owner of Mohanlal Otarmal Jewellers in Mumbai, said at his store in Zaveri Bazaar.
“People do not have much savings to spend on gold. The buying capacity of people has gone down,” he added.

Source : timesofoman.com