Buying in India Projected to Accelerate Posted by James Randolph on July 02, 2012
July 2, 2012 – India, the world’s largest gold market is projected to import nearly 20 percent more gold during the second two quarters of 2012 than it has so far this year, according to Forbes.
In an interview with Bombay Bullion Association President Prithviraj Kothari, it was projected, “Imports in the second half of the calendar year will be around 300 tons, higher than what we have imported in first half, which was 250 tons,” Kothari said.
Kothari projected that the volumes of gold India imports will be dependent on the prices of precious metals on the local market, with a specific projection that imports could rise further should gold prices stay under 30,000 rupees per 10 grams of gold. The price is currently 30,125 rupees per 10 grams of gold.
India is known as a voracious buyer of gold. The Indian subcontinent imports more gold than any other nation, but the imports for the year are around 30 percent less than the previous, according to the Bombay Bullion Association.
Meanwhile, according to Reuters, physical gold buyers have again backed down from the market on Monday as the rupee depreciated. Prices are at their lowest levels in two weeks as traders eye the monsoon rains, which are key to rural gold demand in India.
“Deals are very very slow now,” said a dealer with a foreign bank supplying gold to India, adding that though there were deals on Friday, “all went quiet as someone had switched off the light,” which is a reference to the rupee’s rapid decline in currency markets.
Reuters reports that gold traders in India have been reluctant to place orders even as prices have been dropping during a relative strength in the rupee in the previous week.
Asian private buyers, as well as central banks, have been pursuing a policy of buying on the dip in recent years, which has made the larger countries in the region overall net importers of gold and some of the strongest markets for gold on the planet.
Among the factors currently affecting the Indian gold market are moves in currencies, which include volatility in the euro, registering a 2 percent gain on Friday and then a drop lower on Monday as traders questioned both the stability of the currency and the recent European Summit.