The largest importer of gold in the world, India, has been buying less of the precious metal over the last six quarters than usual. However, imports of gold look set to climb after a long drought, as domestic bullion prices have fallen and the festivals that boost gold fever gear up and give a lift to investor and consumer interest.
Bloomberg reported Friday that Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation, said imports could rise to as much as 200 metric tons. In Q4 of 2011, World Gold Council data indicate that foreign buys of the metal were only at 157 metric tons. For this year’s Q3, according to Bamalwa, imports were probably as low as 170 tons, whereas in 2011 for the same period they totaled 205 tons.
If India starts boosting its gold imports again, that could support a global gold rally. Prices have risen 11% this year, for a twelfth straight year of increases. The price of bullion in India reached a record in September, but dropped about 3% in October thanks to the biggest monthly gain since January by the rupee against the dollar.
“The appreciation in the rupee has caused the gold price to correct from the record levels and this correction is seen as an opportunity by many to get into gold,” said Chirag Mehta in the report. Mehta, a fund manager at Quantum Asset Management Co., added, “With the festival season and marriage season starting now, demand will gain further momentum.”