India's gold imports in 2012 are likely to remain at the same levels as in the previous year, with the country's affinity for the yellow metal staying strong. The country had imported 969 tonnes of gold in 2011, data from World Gold Council (WGC) showed.
High gold prices and the weak rupee had resulted in a 22 per cent rise in gold demand in value terms in India during 2011 (January-December), WGC's 2011 demand trends report said. But in volume terms, demand was down 7 per cent, WGC said. This is due to high prices, volatility in the market and challenging economic conditions.
According to provisional data, India's gold demand was 933.4 tonnes in 2011 compared with 1,006.3 tonnes in 2010. In value terms, demand was up at 220,507 crore compared with 181,107 crore in the previous year. India continued to remain the world's largest gold consuming country.
“In 2012, gold will perform its role as a wealth protector,” said Mr Ajay Mitra, Managing Director — Middle East and India, WGC.
According to him, inflation will continue to moderate, the rupee will strengthen to around Rs 47-48 for a dollar and housing and equity markets will perform well. This will lead to positive sentiment and propel some buying.
During 2011, jewellery demand was down 14 per cent in volume at 567.4 tonnes mainly because of high prices. But investment demand rose 5 per cent at 366 tonnes.
During the year, average gold prices rose by 31 per cent to Rs 2,362 a gram.
Gold jewellery will play a central role in Indian weddings, the overall bridal demand may be a little muted this year, Mr Mitra said. One reason could be a 23 per cent decline in auspicious days in 2012 compared with the previous year.
The gold exchange trade fund market did not see much redemption in India but the trend was reversed in the global market.
“India's gold ETF market is unique as 50 per cent of the gold AUMs are held by corporates,” Mr Mitra said.
Global demand
Global demand for gold in 2011 moved up to a 4,067.1 tonnes compared with 4,050.7 tonnes in the previous year.
In value terms, gold demand was at a record high of $205.5 billion, WGC said. Strong investment demand in China, India and Europe drove demand for the yellow metal up.
In China, demand of 769.8 tonnes was up 20 per cent mainly on strong jewellery and investment offtake.