Festivals to add momentum to Gold buying, imports to continue in 2011


According to a senior World Gold Council (WGC) official, when the country celebrates Dhanteras and Diwali, during October 31 to November 6, gold sales may rise up to 40 percent on year to year basis, boosting the outlook for imports of gold into India in 2010. The highest gold sales in a year is registered on November 3, Dhanteras day and on November 5, gold is bought, as a sign of prosperity on Diwali day.

According to a senior World Gold Council (WGC) official, when the country celebrates Dhanteras and Diwali, during October 31 to November 6, gold sales may rise up to 40 percent on year to year basis, boosting the outlook for imports of gold into India in 2010. The highest gold sales in a year is registered on November 3, Dhanteras day and on November 5, gold is bought, as a sign of prosperity on Diwali day. Meanwhile, Indian Post has announced .5% gm as festival offer on every purchase of 10 gm gold coin , the offer period being upto December 31, 2010

Ajay Mitra, managing director of World Gold Council India and the Middle East told Reuters in an interview. "It's now an economical decision. The urge among consumers is to capture gold now than later as prices have continuously rallied upwards," He further added that WGC expects demand this year from north India, the region that consumed 16.8 tonnes of gold last year for Dhanteras, to be better than the western region. Western India accounted for 19.6 tonnes of the precious metal last year of the total 56 tonnes.

"The clinching argument, as signalled by the Reserve Bank of India's (RBI) purchase of gold is, there is nervousness, and there is uncertainty in terms of other assets' performance and how the currency markets would be shaping up," said Mitra. RBI had, in 2009 end, bought 200 tonnes of gold in an off-market transaction from the IMF for $6.7 billion. The average price for the deal was about $1,045 an ounce. India gold holdings is the 11th largest among its peer group.

The present rate per ounce of gold in the international market is just a tad below the psychological 1400 $ an ounce. Gold had struck an all-time of 20,028 rupees on October 14, this year.

"So far demand has been consistently strong, even the period of Shradh did not take away sheen off gold," said Mitra, referring to the period, when Indians pay homage to ancestors and refrain from auspicious purchases or activities.
The World Gold Council, an association of gold miners like Barrick Gold Corp, the world's biggest miner of gold, and AngloGold Ashanti among others, expects imports to exceed 200 tonnes in the last quarter of the calendar year. against India's imports of 539 tonnes in 2009.

"They (investors and consumers) now want safety towards inflation, protect wealth and also think about returns...so gold is the best available option," said Mitra, adding there had been a dearth of options for investment with good consistent returns.


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