Gold imports lose lustre as world prices soar
May 20, 2003 15:00 IST
India, the world's largest gold consumer, has virtually stopped importing the yellow metal, with global prices soaring in the past week and domestic demand falling after the marriage season, traders said.
Gold demand in the country, which accounts for one-fifth of global consumption, is now almost entirely met by recycled metal and sales by small investors who had bought stock when prices were much lower, they said.
"There is hardly any import demand at current prices. Supply of recycled metal will keep growing if global prices rise further," said Suresh Hundia, president of the Bombay Bullion Association.
India imports an average of 1.6 tonnes of gold a day to meet 70 per cent of its annual needs of about 800 tonnes.
But imports are now negligible. There were no new import bookings in Chennai in the past few days, for example, according to Ranjit Rathod, a bullion trader based in the southern city.
Spot gold jumped to a near three-month high of $359.25 an ounce in early Asia trading on Monday, compared with about $327 a month ago, as the dollar weakened against major currencies and attacks in the Middle East added to bullion's safe-haven allure.
The rise in global prices has prompted jewellers to turn to cheaper recycled domestic gold, with overall demand shrinking after the end of the marriage season, said Girish Kumar Choksi, a bullion importer based in Ahmedabad.
Demand for gold jewellery, which accounts for nearly 85 per cent of domestic sales, rises during the Hindu wedding season, which begins in July and runs to mid-May. Parents and relatives customarily give brides gold jewellery as financial security.
Choksi said the supply of recycled gold might rise in June and July as some farmers sell old jewellery to buy seeds and fertilisers during the sowing season.
rediff.com |
