KOCHI/MUMBAI: Do you know why India has not imported a single ounce of gold in February 2009 against around 23-tonnes import in February 2008?
The reason is simple. Since gold prices have soared to unimaginable levels during the past few months, people have started cashing in on the rise and are selling their old jewellery to book profits.
According to traders, around 20-25 tonnes of old gold jewellery have been sold in February 2009 alone. In contrast, imports have come to a total halt with no shipments into the country taking place in February. During the same period a year ago, 23 tonnes of gold were imported.
The situation is same across the country especially major gold markets like Chennai, Mumbai and Kochi. With gold prices ruling above Rs 15,000 per 10 gm, buyers are now finding it tough to acquire gold. So they are exchanging their old jewellery for new ones.
If the old jewellery has Bureau of Indian Standards hallmarking 916, traders take the old ones at current market prices. While taking new jewellery, buyers have to only foot the making and wastage charges.
Imports of the yellow metal during January-February were only 1.8 tonnes against 41 tonnes during the year-ago period.
Gold (99.9 purity) has increased 13 per cent since the beginning of this year to Rs 15,460 for 10 gm on Saturday. But they are lower than the record Rs 16,000 witnessed recently.
The fall was due to sales of scrap gold exceeding demand, particularly from exchange-traded funds. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, hit a record 1,029.29 tonnes on February 26.
Domestic gold prices have declined by two per cent only during the week since the rupee has weakened against the dollar.
Gold is no longer glittering in India, the biggest global market for the consumption and imports of the yellow metal. Gold analysts said that February 2009 is perhaps the only month in this decade where there has been no gold imports to India. “This is a serious issue. As gold market is all heated up, and gold prices have skyrocketed, imports of the yellow metal have practically stopped in India,” said Akash Gupta, a bullion trader in Mumbai’s Zaveri Market, told Commodity Online.
Buying of gold jewellery has fallen sharply in January leading to a slump in the yellow metal’s imports. According to the Bombay Bullion Association, there was more than 90% plunge in gold imports in January. “The trend has worsened for February. There was zero gold imports to India in February,” says the Association president Suresh Hundia. In 2008, India’s gold imports dipped by 45 per cent to touch 450 tons.
In the last eight years from 2000, gold imports to India every year have been between 400-800 tons. But trade bodies have warned that gold imports this year could collapse to 100 tons, if the current trend continues. “It will not be a surprise if gold imports fall to an all-time low of 100 tons or below in 2009,” said bullion analyst Ashish Roy.
High prices, global economic meltdown and financial crunch among investors and bullion dealers led to low demand for gold in India, where yellow metal is considered the best safe haven investment and people buy gold for weddings and other ceremonies.
