Mumbai, Aug 21 :Notwithstanding the skyrocketing prices, gold imports are likely to cross the 1,000-tonne mark this year on robust investment demand, according to analysts.
Since the US sovereign debt downgrade and the new threats emanating from Eurozone economies, the yellow metal has been on fire, rallying a whopping 14 percent in this month alone as investors shunned stocks and flocked to gold as a safe haven. The last time gold rose over 14 percent 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 struck a record USD 1,877 an ounce last Friday.
In the domestic market, on a single 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 told PTI here.
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, had imported a hefty 958 tonne in 2010, according to the World Gold Council (WGC) data. During the first six months of this year, the import has already crossed 553 tonne, WGC said.
“The jewellery demand may decline as people will try and sell to take advantage of high prices. This will give rise to recycled jewellery which will make jewellers reduce their stocks,” Kumar added.
Echoing Kumar, Geojit Comtrade senior analyst Anand James said import is likely to top the 1,000-tonne mark as investment demand is strong.
“Investment demand is likely to remain firm with the price rise,” James said, adding, however, on the physical side also demand will remain robust as people will buy expecting a further rise in prices.
Meanwhile, the market is expecting the gold rush to gain further momentum and prices may even scale Rs 30,000 before Diwali as the global economic concerns get confounded by the day.
Earlier this week, WGC had indicated that gold import could cross the 1,000-tonne mark this year.
“The first half performance was very strong and if this trend continues, then we may cross the 1,000-tonne mark this year,” WGC managing director for India and Middle East Ajay Mitra told reporters here on Thursday. PTI