This week in Indian gold: imports on the up again, finance ministry considered monetizing bullion
Purchases by India, the world’s number one importer of gold, are predicted to climb for the first time in 18 months.
Indians have been cutting back on buying the metal because of a sharp devaluation of the local currency – gold hit record highs of over 30,000 rupees per 10 grams earlier this year.
With domestic bullion prices declining again, jewellery and investment demand is expected to pick up. India is also heading into its festival season which culminates with Diwali on November 13 and is accompanied by huge spikes in gold buying.
Bloomberg quotes Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation as saying due to pent-up demand and light inventories, imports may jump to as much as 200 tonnes this quarter from an estimated 170 tonnes during the current quarter.
Gold consumption on the sub-continent dropped 42% during the first half of the year to just 340 tonnes from a record 969 tonnes for the whole of 2011 after three years of gains.
Separately, India’s Business Standard reports the country’s finance ministry was “considering the issue of monetising gold” ahead of the last budget session of parliament, “but he apparently gave up the idea due to the Anna Hazare Movement,” a grass-roots transparency and anti-corruption organisation.
The then finance minister Pranab Mukherjee is now president of India.
An estimated 3,800 to 6,000 tonnes of “non-ornamented” gold is present in the country out of a total of 20,000 tonnes with a value that’s about half the GDP of the South Asian nation.