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India’s gold imports jump 45%

NEW DELHI: India’s gold imports in August jumped 45 percent from a year ago, the first annual rise this year, as lower prices and upcoming festivals drove demand in the world’s leading consumer, a trade body chief said.

Local demand for the precious metal picked up after domestic prices tracked global rates lower from a record above 13,800 rupees ($312) per 10 grams in mid-July, triggering imports of about 100 tonnes in August.

“The rise in demand is mainly because of the fall in gold prices,” the president of the Bombay Bullion Association, Suresh Hundia, told Reuters.

International gold prices tumbled to below $800 an ounce in August, after hitting a four-month high of $987.75 in mid-July and a record $1,030.80 in March.

India imported about 69 tonnes of gold in August 2007. In July this year, it bought just 22 tonnes, Hundia said, against 64 tonnes in the same month a year ago.

The lower prices came at just the right time for Indians wanting to buy ahead of a string of religious festivals, when gold buying is considered auspicious. Reflecting the increasing demand, the premium over international rates more than doubled from a month earlier.

Hundia added that local gold prices were likely to remain at the current level of about 12,000 rupees per 10 grams. But a leading trader said demand remained strong but was levelling off.

“The premiums have halved to $2.5 per kilogram from $5 in mid-August. The demand is still there, but it seems to be stabilising,” said Girish Choksi, an Ahmedabad-based dealer. Improved local supplies and better stocks with retailers have also helped cool premiums.

Demand seen easing: A bullion dealer with a leading Indian bank said demand was likely to remain healthy, but could weaken if prices rose over the next month.

Krishna Kumar Nathani, managing director of Indiabullion.com, said gold prices could sustain their recent gains if the metal breached a resistance level of $845 an ounce and closed above it. But he added the immediate prospect of such a sharp rise seemed to be fading because of the dip in crude oil prices.

“Indian gold demand is still good. There is no ready delivery ... and international suppliers are giving a time of seven to 10 days for delivery,” Nathani said.

“Still demand is not as strong as it was in the first half of August. Many traders have already booked profits for short-term gains,” he added.

Another analyst said the upcoming festival season would help to ensure local gold prices remained steady.

“We are getting into the festival season shortly. There is an anticipated demand for gold. That is why you won’t see much of a fall in prices in the local market,” said Gnanasekhar Thiagarajan, director at Commtrendz Risk Management. He said a stronger dollar against the Indian rupee would keep local gold prices pegged at current levels. reuters

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