Gold consumption may remain steady at 800-850 tonnes in 2009

Gold consumption may remain steady at 800-850 tonnes in 2009

Mumbai: Despite the global slowdown, weaker dollar value and reduced physical offtake, total consumption of gold in India may remain static to around 800-850 tonnes for the calendar year 2009, from 900 tonnes last year, thanks to sustained rural buying and retail investment demand, trade sources said.

Traders expect total imports of gold to remain around 475-500 tonnes during the year.

In 2008, the country imported total 712.6 tonnes of gold, according to World Gold Council (WGC). Of which, 500 tonnes of gold was for Jewellery making and 211 tonnes for investment purposes.

In 2009, the country may import less gold but the consumption for gold jewellery and investment purposes would remain steady, Agri-commodity Consultant, Dhimant Bhatt said.

“I believe total imports would reach to round 500 tonnes this calendar year though higher prices have gone up to record levels recently. Standard gold prices in the domestic market hovered around Rs16,800 per 10 gram, an all time high levels," Bullion Analyst, Bhargav Vaidya said.

Gold prices may see some correction in the short run as rural demand for physical gold is likely to weaken due to overall slowdown and erratic monsoon but overall bullish trend to continue next year, Bhatt said.

Average price of gold in 2009 so far has increased by 21% to Rs15,105 per 10 gram from average Rs12,500 per 10 gram in the full year 2008.

“The gold market become more vibrant and I would like to add that price gap between landing cost of imported gold and market price has reduced to almost zero levels and there is no disparity in the market due to availability of online spot trading platform for gold trading," RiddiSiddhi Bullions managing director, Prithviraj Kothari said.

The market will be highly volatile in next six months and target range will be $1,020-USD 1,178 an ounce. Prices may remain in the range of Rs17,500 to Rs18,500 per 10 gram in rupee terms and may see Rs15,000-Rs15,500 per 10 gms on lower side, Kothari said.

One should always buy gold on dips or on any correction, he added.

It can be noted that gold prices jumped up by nearly 1.5 times from average Rs5,850 in 2004 to Rs15,105 per 10 gram over past five years on increasing demand for investment purpose. It is considered as a hedge against inflation.

COMEX gold futures for December delivery traded near $1,120 an ounce last week after rallying to a fresh record of $1,122.20 an ounce in the previous session.

A weak US dollar and general flat currency fear across the globe shot up the gold price to new highs.