India's Jan gold imports seen up 6.6% YoY: Poll

India's January gold imports are seen rising on softer prices and as food inflation boosts farm incomes, fuelling demand for gold in the world's biggest market for the metal.

The median forecast in a Reuters poll of 10 industry experts showed gold imports this month may have risen 6.6% from a year earlier to 36.25 tonne as demand surged in mid-January, which marks the beginning of an auspicious phase in the Hindu calendar, when weddings are usually held.

"There has been a buoyancy in the market after the 15th of January as prices started to decline," said Daman Prakash Rathod of MNC Bullion, a wholesaler in Chennai.

"Agricultural produce prices have jumped, so the savings of the rural population are going into gold," Rathod said.

India's food inflation, which had mostly remained in double digits for the last one year, remained sticky in mid-January on higher onion and fruit prices.

On Friday, front-month gold futures on the Multi Commodity Exchange of India traded at Rs 19,637 per 10 grams, down 0.21% from its previous close and down more than 6% from its all-time high of Rs 20,924 on December 7.

In the foreign market, mainly driven by big investors, gold edged higher as caution dogged the financial markets ahead of US growth data due later, having earlier hit a near four-month low as a better economic outlook dented safe-haven buying of the metal.

"After seeing historical highs last month, traders thought it was a good time to build inventory for the upcoming season," said Pinakin Vyas, assistant vice-president with IndusInd Bank in Mumbai.

The majority of India's over 1 billion population is rural and a large part of farm income is invested in gold.

In December gold imports slackened after the festive October and November, as prices in the local market struck new highs, making buyers conserve their savings.

Bright February

Traders said if the decline in prices continues, or if the current levels hold steady, demand for gold may rise in February, spurred by weddings.

Urban demand may also get a boost as Valentine's Day is fast gaining popularity among the youth.

"In February, premiums might ease as China would go into its new year holidays and reduce buying," said Ganesh Agarwal of Shiv Sahai & Sons, a wholesaler in Chennai. "That would make supplies better for India."

A buying spree in China and Hong Kong before the Lunar New Year next month lessened availability and Agarwal said gold contracted this week would be delivered next week as a result.

In 2010, India's gold imports fell to 332.8 tonne from 339.8 tonne purchased a year earlier, provisional data from the Bombay Bullion Association shows. But higher imports were expected this year on strong investment-led purchases.