Mumbai: Gold imports by India, the biggest buyer, dropped 18% last year as record prices lowered demand from jewellers and housewives, a traders’ group said.
Overseas purchases were 343 tonnes in 2009, compared with 420 tonnes in 2008, according to data from Bombay Bullion Association Ltd. Imports in December jumped to 34 tonnes from 3 tonnes in the year-earlier month, the data shows.
Gold posted its ninth annual gain last year on speculation that the dollar will extend a slump, spurring demand for the metal as an alternative investment. The metal rose to a record $1,227.50 (Rs56,097) an ounce on 3 December.
“Indians are slowly getting used to the high gold prices and that should sustain demand,” said Amar Singh, an analyst with Angel Commodities Broking Pvt. Ltd. “There’s a consensus that gold prices will stay high because of inflationary pressures and a weakness in dollar.”
Spot gold was bid at $1,132.65 an ounce in early trade against $1,127.95 late in New York. The metal slumped 2% on Tuesday after the People’s Bank of China ordered banks to raise the amount of deposits they must put aside as reserves by 50 basis points starting 18 January. One basis point is equal to one-hundredth of a percentage point.
The decline in price is seen as a buying opportunity, said Angel’s Singh. There’ll be periods of drop in India’s demand depending on prices.
Monthly imports may average 30-35 tonnes this year and the metal may trade at $970-1,300 an ounce this year, he said.
Global gold consumption was 34% lower in the third quarter compared with a year ago, when investors bought bullion as a haven from the economic crisis, the World Gold Council said 19 November. It was 10% higher at 800.3 tonnes in the July to September period as Chinese demand reached 120.2 tonnes.
Indian demand climbed 26% to 137.6 tonnes in the three months ended September compared with the previous quarter, while jewellery consumption rose 27% to 111.6 tonnes, the council said. The country bought 200 tonnes from the International Monetary Fund in November for $6.7 billion.
Gold will average $1,199 an ounce this year, 23% more than in 2009, according to the average forecast in a survey of traders and analysts by the London Bullion Market Association.
PTI contributed to this story.