Indians are slowly learning to live with the high prices of gold. The signals to this effect are visible in the bullion market now.
According to reports, India's gold imports showed a gain of 7.79 per cent in seven months to July this year on improved festival demand and occasional buying from retail consumers.
High prices, individual investors and funds retaining their faith in gold as an alternate investment option also helped in improving the import figures. Total inbound supply gold was recorded at 171.6 tonnes in the first seven months of the current calendar year as against 159.2 tonnes in the corresponding period last year.
Gold imports in July were at 16 tonnes, 44 per cent lower than the same month of the previous year but, 16 per cent higher than the previous month. In July 2009, gold imports were recorded at 28.4 tonnes as global economies were recovering from slowdown and investors preferred to invest in the yellow metal amid forecast of price rise. Gold prices were hovering around Rs 15,000 per 10 gm in Mumbai around that time.
In June, gold imports fell to six-month low to 13.8 tonnes in absence of any enthusiastic demand due to the lack of festivals and ceremonial opportunities.
Gold imports have improved little from the last month due to almost stable price on highs. Low global economic sentiment which started with the collapse of Lehman Brothers in September 2008 followed by meltdown pushed gold demand down as investors preferred to hold cash instead of any asset class. As a consequence, gold imports to India fell abysmally low in single digit in the first quarter of 2009. Also, imports plunged to a mere 4.8 tonnes in March 2009 which analysts termed as minuscule looking at Indians aspiration for gold jewellery.
Total import of the yellow metal, thus, fell 19 per cent at 339.8 tonnes in 2009 from 420 tonnes in the previous year. Meanwhile, World Gold Council (WGC) has forecast robust demand in the second half of the calendar year 2010.
After holding above Rs 18,000 per 10 gm ($1156 an ounce overseas) for a prolonged period, gold fell 2.63 per cent or Rs 480 to Rs 17,765 per 10 gm this week. Although, GFMS had earlier forecast $1150 an ounce to be a good entry level of entrepreneurs pitch into gold sector.