India's Gold imports plunge on falling demand

January 15, 2009

Commodity Online
MUMBAI: Even though gold saw a huge fall of around Rs 335 per 10 gm this week and came down to below 13K level, it is not helping to lure buyers into the market. Since the buyers are keeping away from market, this may hit the gold imports of the country.

It seems people still believe that gold prices are very high even though the prices are below 13K now.

In Mumbai, gold prices plunged to Rs 12,990per 10 gm on Tuesday.

According to analysts, the current fall is because of the economic slowdown and a surge in dollar.

Market watchers said people are making use of the present situation and they are selling old gold ornaments to make maximum profit from this high prices siatution.

According to traders, if prices fall below $800 an ounce in international markets or Rs 12,600 per 10 gm in domestic markets physical buying may revive.

The lower demand has cast its shadow over imports. India imports more than two-thirds of its annual demand of about 700 tonnes a year. In December imports fell to as low as 3.7 tonne as high prices refrained traders from purchases even during the Christmas and New Year festivals.

With this week's fall, gold has become cheaper by more than Rs 1,000 per 10 gm, down nearly 5.04% from its life-time high of Rs 13,680 touched on July 15, 2008.

In international markets, gold, which normally guide price trend here tumbled $37.70 an ounce at $815.20 as the euro fell against the dollar on speculation that the European Central Bank will cut interest rates.

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