Tuesday, 3rd February 2004 (3143 views)

Traders are predicting that gold imports to India could slide in the coming months as buyers are put off by rising prices.

According to traders such as Vice President of the Bombay Bullion Association, Harmesh Arora, Indians are being prompted to exchange their gold jewellery for cash.

However, gold for immediate delivery has climbed 13 per cent in the past six months, reaching their highest level in more than 15 years in January.

India imported an approximate 600 tons of gold last year, accounting for roughly 70 per cent of the nation's consumption, according to preliminary estimates from the World Gold Council.

Although some figures are promising others are not quite so positive, with imports of gold bars to India dropping by half in recent months to $85 million in October and almost 90 per is used in jewellery exchanged in gifts during weddings and festivals.

A director at the Bombay Bullion Association, Prithiviraj Kothari claimed that gold jewellery purchases have been cut by almost 90 per cent, claiming people prefer to invest in 'shares and other securities' at the current prices involved.

Paul Walker, chief executive of GFMS, a London based precious metals research group explained that an extended drop in Indian imports could cap gold's price gains.

'Lower bullion imports in India will obviously have an impact on international gold prices as it is such a big market. When prices are high, Indian demand drops, thus bringing prices down' Mr Walker added.

However, the effect will probably not be immediate.

 

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