Gold imports by India, the biggest consumer, may climb this year as record prices fail to deter buyers and investors seek a hedge against inflation, according to broker Nirmal Bang Commodities Pvt.
Imports may total 770 tons to 810 metric tons, up from 700 tons to 720 tons in 2010, said Kunal Shah, head of commodities research at the brokerage. Imports last year were about 700 tons, the Bombay Bullion Association said Jan. 3.
Gold climbed to a record $1,431.25 an ounce on Dec. 7 and rallied 30 percent last year for a 10th straight annual gain as investors bought the precious metal as a protector of wealth. Demand in India surged 79 percent in the nine months ended Sept. 30 as investors sought a safe haven and higher incomes spurred jewelry sales, according to the World Gold Council.
“Demand is very good, even at higher prices,” Anjani Sinha, chief executive officer of the National Spot Exchange Ltd., India’s biggest bourse for trading physical gold, said in an interview in Mumbai. “People still believe prices may go up further. The scenario in 2011 will be as good as in 2010.”
Imports this year may total 650 tons to 700 tons, up from 650 tons last year, Sinha said. Purchases in 2010 may exceed 750 tons, the World Gold Council said Nov. 17. The country bought 559 tons in 2009, according to the producer-funded group.
India’s inflation rate remains at “elevated levels,” the Reserve Bank of India said last week. Higher global commodity prices and domestic demand continue to put pressure on prices, the central bank said in a Dec. 30 report.
‘Robust Demand’
“Inflationary concerns and strong investment demand is likely to drive gold prices higher,” Nirmal Bang’s Shah said in a phone interview. Global prices will touch $1,470 an ounce in the first quarter, he said. “A lot of people are keen to invest in gold, even at these levels. Demand remains robust.”
Gold-jewelry demand in India surged 73 percent in the nine months ended September, according to the council. Total demand in the nine months climbed 79 percent to 650.4 tons, the council said. Annual and fourth-quarter figures haven’t been released.
Futures for delivery in February on the Multi Commodity Exchange of India Ltd. rose 0.1 percent to 20,475 rupees ($453) per 10 grams at 10:44 a.m. in Mumbai. Prices reached an all-time high of 20,924 rupees on Dec. 7. In New York, February-delivery futures advanced 0.4 percent to $1,384 an ounce at 10:45 a.m. Mumbai time, and bullion for immediate delivery added 0.2 percent to $1,383.93.
Weak Currencies
Gold may rise to $1,500 to $1,600 in the year ahead, New Delhi-based broker Religare Commodities Ltd. said in a Jan. 3 report. “The outlook for gold remains bullish, as it continues to provide a hedge against the persistent quantitative easing and weakness in Fiat currencies,” Religare said in the report.
Purchases by India in 2011 will be determined by prices, Prithviraj Kothari, president of the Bombay Bullion Association, said in a phone interview from Mumbai.