The Hindu Business Line : 2008 gold imports put at 720 tonnes

Mumbai, Jan. 8 Information relating to gold imports into India has often been an enigma and the precise quantum of physical arrivals has been hard to ascertain quickly. For the year 2008 that just ended, several figures – ranging widely from 450 tonnes to 800 tonnes – are floating around.

One report suggested that imports were down by close to 50 per cent. While it is a fact that gold demand in the country is price elastic and to a lesser extent income elastic, there is little concrete evidence that the inflow of the yellow metal plummeted during the year that just went by. Indians continue to have a fascination for the yellow metal. To clear the confusion, the international consultancy GFMS told Business Line that India’s gross imports in 2008 were an estimated 720 tonnes as compared with 862 tonnes in 2007. The decline in physical arrivals to the extent of slightly less than a fifth should come as no surprise. High prices and volatile market conditions virtually the whole of last year disenchanted buyers. Also, a booming stock market made investment in the yellow metal less attractive.

The current year is likely to be a tough year. Investor demand will be key to price movements. Gold is sure to be impacted by the gyrations of the dollar. Although weakening dollar and geopolitical risks are sure to haunt the world and support gold prices, poor macroeconomic environment and tight liquidity may cap the upside. High prices may also once again result in demand compression in price conscious market such as India.

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