MUMBAI (Commodity Online): India’s gold imports during 2009 continue to be stagnant thanks to high prices of the yellow metal and falling sales of gold jewellery. In July, gold imports into India, the world’s largest consumer and importer of the yellow metal, fell by a whopping 120% to touch around 10 tonnes. In July 2008, India had imported around 24 tonnes of gold. The apex bullion dealers association--Bombay Bullion Association (BBA)—the says the reason for the continuing fall in gold imports is the high price of gold in the international market. “Gold sales across India have fallen thanks to the high price of the yellow metal. This is affecting gold imports. Gold imports by India continue to be sluggish. The current estimate for July is that gold imports are around 10 tonnes,” BBA president Suresh Hundia said. On Friday, gold at Mumbai spot bullion market was trading around Rs 14,665 per 10 grams, up 20 percent from a year ago. In the futures market, immediate August gold at India’s largest commodity bourse, the Multi Commodity Exchange (MCX) was trading at Rs 14713 per ten grams. Bullion analyst Pratibha Srivastava says 2009 may be a disappointing year for India as far as imports of gold are concerned. Imports of the yellow metal by India in the first six months of 2009 ending June have plunged by 75% to touch 51 tonnes. “I think this is the biggest plunge in gold imports by India in recent years. High gold prices, global meltdown and scrap gold sales are all contributing to the fall in gold imports by India,” Srivastava told Commodity Online. According to the data released by BBA, gold imports have been stagnant so far this year and was at 51.6 tonnes during January-June 2009, compared to 139 tonnes in the same period in 2008. Commodity Online bullion analyst Nitin Khanna agrees saying high prices of gold has also led to a big market for scrap gold in India. “Nobody is eager to buy gold these days because of the big price of the yellow metal these days. Old gold is being traded in India and that is the reason why gold imports have come down drastically,” he said. Global economic meltdown, uncertainty in stocks and commodities markets and volatility in gold prices have had a major impact on India’s gold imports in 2009. In January, gold import by India was a paltry 1.8 tons against 18 tons in January 2008. In February and March, gold imports by India fell to zero levels, the worst in the last one decade. In April India imported 20 tonnes of gold due to rise in demand for ‘Akshaya Tritiya,’ the gold buying religious festival. Gold imports in June were less by about six tonnes from May’s imports of 17.8 tonnes. In 2008, India's gold imports had stood at around 400 tonnes. In the last eight years from 2000, gold imports by India every year have been between 400-800 tons. Fall in gold demand has been thanks to high prices of the yellow metal. Gold prices have moved up as investors found heaven in the yellow metal on fear of deflation. But even though investment in gold looks attractive, many investors have been struggling for survival after they lost money in commodities and equity markets. Khanna says one major reason why gold imports by India are plunging is because Indian banks have a lot of carryover gold stocks from last year resulting in lower imports. “It looks 2009 is going to be the worst year for gold imports by India looking at the half-yearly figures of 51 tonnes,” he added.

Source