Commodity Online
MUMBAI: Even as investors across the globe are busy acquiring gold fearing a global recession, India’s gold imports crashed to just one tonne in January 2009 following a demand fall due to high prices.

According to experts, there is no demand for gold jewellery now as the prices are too high for customers. Even during the wedding season the gold demand is not as high as expected.

Fall in jewellery demand in November and December has also led to ample carry-over stocks. But even as jewellery demand has waned, investment demand for gold is at its strongest, propping the price.

Compared with last January, imports are down by over 90%. There are hardly any fresh imports coming into the market.

The current cost of second-hand gold is Rs 4,00,000 a kg. This is being melted, refined and re-used. Nearly 50-100 kg of scrap gold has come into markets.

Gold in the physical market is currently ruling at around Rs 13,700 per 10 gm.

Experts said demand will pick up in the next fortnight, and prices should also fall to around Rs 12,500 per 10 gm levels. In that situation, jewellery demand for gold may go up.

A large part of India’s imported gold is used to make jewellery that is exported to overseas markets including the US and Europe. New export markets are also being developed in parts of Asia since the general export scenario has been poor over the last year.

In the middle of last year, when gold prices had crashed, most banks scrambled to acquire gold, at times paying exorbitant premiums. Subsequently, the jewellery demand for gold has been very poor because prices have been high.