Already a Bloomberg.com user?
Sign in with the same account.
(Updates with comment in sixth paragraph.)
Oct. 24 (Bloomberg) -- Gold imports by India, the world’s largest bullion consumer, may decline by as much as 30 percent this month as higher prices weaken demand during the main Hindu festival of Diwali, according to an industry group.
Imports may be 70 metric tons to 80 tons compared with 100 tons a year earlier, Prithiviraj Kothari, president of the Bombay Bullion Association, said by phone. Purchases on the auspicious gold-buying day of Dhanteras today have been slow as prices are almost 40 percent higher than last Diwali, he said.
Weaker Indian sales may extend losses in gold, which has declined 14 percent from an all-time high last month. Demand in India usually peaks during the festival season, which started this year with Eid in August and ends with Diwali on Oct. 26.
“India’s gold sales this Dhanteras will be stagnant at last year’s level of around 8 to 9 tons,” said Rajesh Mehta, chairman of Rajesh Exports Ltd., India biggest jewelry maker. “Prices are still high.”
Gold for immediate delivery advanced 0.4 percent to $1,648.98 an ounce at 2:57 p.m. in Mumbai. The price, which reached a record $1,921.15 on Sept. 6, has rallied 23 percent over the past year as Europe’s debt crisis boosted haven demand.
“Inflation has been higher and people have less money in hand to buy gold,” Kothari said. Food prices in India rose 10.6 percent in the week to Oct. 8 from a year earlier, the fastest pace since April, data showed last week.
“This Diwali we may not find purchases in huge lots, but in smaller quantities as investment in gold continues by way of monthly installments,” Reena Walia Nair, senior analyst at Angel Commodities Broking Pvt. Ltd., said in a report today. Local investors understand prices will continue to rise and want to buy, leading to purchases in a staggered fashion, she said.
Demand for gold coins, bars and exchange-traded funds will continue to outpace jewelry sales, Kothari said. “The uncertainty in the global markets still persists, so buyers are waiting for prices to stabilize.”
Investment demand in India jumped 78 percent to 108.5 tons in the three months to June 30, the second-highest quarter on record, according to the World Gold Council. Consumption rose to a record 963.1 tons in 2010, driving imports to an all-time high of 958 tons, according to the council.
The December-delivery contract on the Multi Commodity Exchange of India Ltd. gained as much as 0.5 percent to 26,894 rupees ($538.53) per 10 grams today and traded at 26,850 rupees at 2:47 p.m. in Mumbai.
--Editors: Jake Lloyd-Smith, Anil Varma
To contact the reporter on this story: Swansy Afonso in Mumbai at email@example.com
To contact the editor responsible for this story: James Poole at firstname.lastname@example.org