India set for record gold imports

Notwithstanding skyrocketing gold prices, its imports are likely to cross the 1,000-tonne mark this year on robust investment demand, say analysts. Since the US sovereign debt downgrade and the new threats emanating from eurozone economies, gold has rallied 14% this month alone, as investors shunned stocks and flocked to the yellow metal as a safe haven.

The last time gold rose over 14% in a month was in 1999. In the domestic market, gold scaled a new high of over Rs 28,150 per 10 gm in futures market, while in global markets it hit a record USD1,877 an ounce last Friday. In the domestic market, on that day gold rose as much as Rs 1,310, the highest ever single day gain, they said.

"With rising prices, investment demand is likely to grow, especially in the gold ETFs (exchange traded funds) and coins, in expectation of better returns," brokerage firm Maya Iron Ores Vice-Chairman Praveen Kumar said. The country's total gold ETFs investment has reached 15 tonne, which is expected to double in a year, Kumar said. However, the jewellery demand is likely to decline due to rise in recycled gold in the market, he said.

India, the largest consumer of the yellow metal, has imported 553 tonnes during the first six months of this year, WGC said.