The amount of gold imported into India may reach the level of the entire 2009 calendar year as early as the end of August. India is the largest buyer of gold bullion in the world and has recently experienced “robust” demand, in the words of the World Gold Council. The desire for gold jewelry and sales for investment were largely responsible for the increase.
As of June 2010, India had purchased 348 metric tons of gold for the calendar year. This is impressive, considering the country bought 559 tons during the entire 2009 calendar year. During these first six months of 2010, the demand for gold jewelry grew 67 percent and the amount of gold sold for investment purposes more than tripled.
According to Ajay Mitra, Middle East and India Managing Director at the World Gold Council, “The imports, if the trend continues, should cross last year’s figure any time in July-August.” The country’s demand for gold bullion almost doubled during the first half of the year. This occurred despite gold prices rising to record levels and was likely due to higher incomes within the country.
The trend is not expected to abate because the second half of the year is historically the time when jewelry purchases increase due to weddings and festivals. The festival season begins next month and the peak in bullion sales usually occurs during the Diwali festival, which is on Nov. 5. The marriage season, which runs from November until December and again from late in March through early May, is also a popular time to purchase gold. Some form of gold is usually included in the Indian bridal trousseau.
Mr. Mitra comments that the Indian festivals seem to get “louder and bigger” each year, a good sign for gold sales. Despite all of this, the 150 metric tons of gold imported by India during the three-month period ending in June was less than the 159 tons imported during the same period one year earlier. The total demand for gold did not change significantly during this period in 2010 but demand for gold jewelry declined by two percent.
Source: Pearson, Madelene. Bloomberg Businessweek. India Gold Imports May Reach 2009 Level This Month.