Global rates of the yellow metal jump 38.4% compared with 34% at home in 2009.
Gold imports by India touched a decade low as the prices shot up significantly affecting the demand of the yellow metal. In the current calendar year, gold imports were estimated to be around 380 tonnes. Data available since 1997 showed that gold imports in India have never fallen below 400 tonnes.
India’s gold demand has remained in the average range of 600-800 tonnes. Only in the lean economic period in global economies and specially in India during 2002 and 2003, gold imports slumped to around 500-550 tonnes. According to Indian Bullion Market Association (IBMA) data, the national body representing Indian bullion trade and industry, gold imports in 2008 fell to 413 tonnes compared with 757 tonnes in 2007.
“Volatile rupee and rising prices were responsible for steep fall in imports in the last two years,” a senior analyst with IBMA said. Despite India being one of the largest consumers of gold, it is import dependent. Domestic prices are decided by the cost of imports.
An executive with a foreign bank active in importing gold for jewellers in India said on the condition of anonymity that “Jewelers and traders avoid importing gold if they feel Indian currency is strengthening and in that case local gold prices fall despite rise in overseas price due to fall in import cost in terms of the Indian currency.”
“High prices have affected the demand. Imports in the current year may be around 380 tonnes. Imports will rise if prices moderate as people have accepted the fact that they have to live with higher gold prices,” Suresh Hundia, president, the Bombay Bullion Association said.
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So far in 2009, gold prices have gone up 33.8 per cent to Rs 18,210 per 10 gm while international prices have gone up 38.4 per cent to $1,217 an ounce. Ajay Kedia of Kedia commodities said, “Investment demand and rush to move to safe assets has lead a sharp rise in gold prices. Now even gold mines that have sold their production in forward are de-hedging as they feel spot prices would remain higher than the price at which they have hedged or sold in forward.”
In London, gold surged to a new high of $1,226.10 an ounce, as the yen extended its losses.
In New Delhi also gold continued its rising spree to set a fresh record at Rs 18,550 per 10 gm in the bullion market on Thursday as dollar remained weak.