Returns on gold up by 34% in a year

The returns on gold investments have grown by around 34 per cent in the last one year as the precious metal has become a 'preferred choice' option for a large number of investors in the country.

"Since disposable incomes of average Indians have gone up significantly, gold has become a preferred choice of investment for a large number of investors," Assocham President Venugopal Dhoot, said.

Gold imports would grow by 250 tonnes till FY'08, he added. Speaking at an Associated Chambers of Commerce and Industry of India (Assocham) function here, Dhoot called for much-needed investments into the country to fully exploit its mineral resources while making India a vibrant trading hub for the gold and diamond businesses.

Since the economic slowdown in America is unlikely to be arrested in the immediate future, its impact will be harsh on the dollar which would continue to weaken while rupee gets stronger, he added.

The gold investors, particularly in India invest more in gold for security reasons, ASSOCHAM said in an assessment on gold prices.

The gold imports in the current financial year would be around 1,000 tonnes, of which nearly 700 tonnes would go towards jewellery-making and the rest shall be used for investment purposes in the form of bars and coins.

The bullish phase in gold would continue because the global production of gold is 2,500 tonnes against the demand of over 5,000 tonnes.

The gap between supply and demand of gold would continue to constrict and valuation would thus be on the rise, said Dhoot.