Why Gold Imports to India Decline?

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Gold imports into India, the country’s largest gold consumer in the world, declined 56% in quarter 4 / 2011 over the same period last year, that amount of gold imported into the country the whole year decreased 8.4%, its Reuters news agency said.

Gold prices to record highs, interest rates, the loss of value of rupee has pushed demand for gold in this country plummeted.

India imported a total of 787 tonnes of gold in 2011, compared to 958 tonnes in 2010, Mr Prithviraj Kothari, Chairman of Bombay Gold Association, said in an interview with Reuters.

In November, the World Gold Council (WGC) has predicted that, in the fourth quarter, India will import more than 281 tonnes of gold last year, bringing the gold import volumes over the year 1000 tonnes. However, in practice, the amount of gold imported into India in the fourth quarter last only 125 tons.

Period from May 10-12 annual festivals and weddings in India, a time when Americans to invest heavily to buy gold and gold jewelry. Rarely, the country’s gold demand fell in Q4 compared to Q3 this year. As the country’s largest gold consumer in the world, India’s gold demand almost entirely by way of imports.

“Gold imports into India in the fourth quarter this year was poor compared to last year and third quarter. In November, many people even go gold, see gold as an investment of time to finalize, “Mr. Kothari said.

Gold prices in India set a record 29,516 rupees ($ 553.8) / 10 gram in the past on 15/11. Earlier, world gold prices hit all-time peak above $ 1,920 / oz in September.

Gold price in rupee has risen 32% in 2011. In addition to the escalation of the international gold price in the third quarter in 2011, gold prices in India also supported by the rupee depreciated 16% against the USD. Including in 2011, the international gold price increased 10%.

One of the reasons why India’s gold demand weakened in the fourth quarter because people bought more gold country in nine months earlier. In the third quarter of the year, the Indians rushed to buy gold bars and gold coins in the hope of higher gold prices will rise. From first quarter to the end of your 3 / 2011, investment demand for gold in India increased 22% over the same period last year, to $ 272.1 tons – according to data from WGC.

However, the increase of investment demand for gold is not enough to offset the strong decline in demand for gold jewelry as a result of higher gold prices and currency depreciation, Mr. Kothari said. “Sales of gold jewelry market of India is very low this year, while investment demand for gold increased. People only interested in gold bars and gold coins. Gold Investment demand accounted for 35% of total gold demand in India in 2011, “Mr. Kothari said.

According to the WGC, in 2010, investment demand for gold accounted for only 22.6% of total gold demand in India.

Mr. Kothari said that the factors that undermine India’s gold demand in the fourth quarter of the past may continue work in the quarter 1 / 2012. “The fact that gold prices remain high, high interest rates in India, liquidity crunch, I think, India’s gold imports in the quarter 1 / 2012 will be reduced 50% compared to last year,” said Kothari forecasted.

According to WGC, in quarter 1 / 2011, India imported 286 tonnes of gold. Mr. Kothari said that international gold prices will range from 1430-2000 USD / oz in 2012.

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