India STC Sees Gold Imports Up 25% In Yr To March 2012.

KOVALAM, India Aug 19 (Reuters) - India's government-run gold importer State Trading Corporation (STC) expects a 25 percent jump in its imports to 125 tonnes in the year to March 2012 due to surging investment demand, its top official said on Friday.

"There might be a temporary dip in demand due to high prices, but again people may start buying because of investment," N.K. Mathur, chairman and managing director with STC, told reporters on the sidelines of a conference in the southern state of Kerala.

Local gold prices MAUc1 have gained more than 25 percent so far this year to peak at 27,962 rupees per 10 grams on Friday evening.

Imports in India, the world's largest consumer of the metal, rose 34.9 percent in the first half of the year to 553 tonnes after a surge of 72 percent in 2010 to 959 tonnes and a 38 percent rise in investment demand.

STC hopes to restart its imported coins sales division to cash in on rising investment demand, its chairman said.

Mathur, asked if it would buy coins manufactured by MMTC PAMP, which expects to start its refinery in October, said this was possible.

"We are not averse to buy from MMTC, it is business at the end of the day. If they want to market and we want to do it, it can work," said

Mathur said it was not keen on selling silver coins as these are bulky, adding that silver imports formed "a small portion of its business."

Mathur expects gold prices to trend upwards in the short-term.

"In the short time it will rise, it will cross the $2,000 (an ounce) mark," said Mathur, adding there was an absence of alternatives for investment.

"The dollar is uncertain and even equity markets are uncertain, the only safe place is gold," he said.

Spot gold on international markets was set for its biggest one-week rise since late 2008 on Friday after a raft of soft economic data battered stock markets, though prices eased from record highs as equity markets and the euro edged off lows in afternoon trade.

Spot gold was up 1.7 percent at $1,853.89 an ounce. It is on track for its biggest one-month rise in nearly 12 years in August and is up 31 percent so far this year. (Reporting by Siddesh Mayenkar; Editing by Anthony Barker)

Source : af.reuters.com