New Delhi: India’s state-run trading firm MMTC Ltd aims to import 23% more gold in 2008-09, with global financial turmoil expected to spur demand for investment.
India is the world’s largest gold consumer, and saw investment demand jump 10% to 215.4 tonnes in calendar 2007, according to the World Gold Council.
“Our imports this year will be more than 150 tonnes, and it could even touch 180 tonnes,” chairman and managing director Sanjiv Batra told Reuters late on Monday.
“The price of gold is bound to go up in the long term, therefore people will hedge by investing in it,” said Batra, who in May expected imports to reach 140 tonnes in the year to March from 122 tonnes last year.
Indian shares rose around 4% on Tuesday to track gains in overseas markets after government across the world unveiled measures to restore confidence in the troubled financial system, but doubts remained about the strength of the rise.
Volatile shares boost gold’s appeal as an alternative investment to bonds, stocks and currencies. India’s central bank has battled hard over the past week to shore up the rupee in the face of sustained dollar buying by foreign funds.
“If your stock market and currency are volatile, people will go in for gold,” Batra said.
Despite volatile gold prices, MMTC was confident about securing enough bullion to meet demand from customers as suppliers avoided dealing with private dealers, who may be facing cash flow problems due to the global liquidity crunch, he said.
Sales during the first six months of the fiscal year, until September, were roughly equal to last year’s imports of 122 tonnes and could pick up in coming months, he said.
By 0513 GMT, gold was at $843.85 an ounce, up $13.05 from the New York notional close, having hit an intraday high of $850 an ounce. It had dropped to $821 on Monday, its weakest since 3 October.
Gold, which struck a record at $1,030.80 in March, traded hit a two-month high of $931 on Friday on a weak dollar before tumbling to $823.50 as investors sought cash to cover margin calls from losses in equities.
Gold can be bought as investment in the form of coins and small bars, gold certificates, gold-backed securities or gold-oriented funds, in which investors can buy shares of mining companies.