Commodity Online
MUMBAI: Gold is no longer glittering in India, the biggest global market for the consumption and imports of the yellow metal. Gold imports to the country has plunged to zero levels, as no bank and trading houses imported any gold during the month of February.

Gold analysts said that February 2009 is perhaps the only month in this decade where there has been no gold imports to India. “This is a serious issue. As gold market is all heated up, and gold prices have skyrocketed, imports of the yellow metal have practically stopped in India,” said Akash Gupta, a bullion trader in Mumbai’s Zaveri Market.

Buying of gold jewellery has fallen sharply in January leading to a slump in the yellow metal’s imports. According to the Bombay Bullion Association, there was more than 90% plunge in gold imports in January. “The trend has worsened for February. There was zero gold imports to India in February,” the Association president Suresh Hundia. In 2008, India’s gold imports dipped by 45 per cent to touch 450 tons.

In the last eight years from 2000, gold imports to India every year have been between 400-800 tons. But trade bodies have warned that gold imports this year could collapse to 100 tons, if the current trend continues. “It will not be a surprise if gold imports fall to an all-time low of 100 tons or below in 2009,” said bullion analyst Ashish Roy.

High prices, global economic meltdown and financial crunch among investors and bullion dealers led to low demand for gold in India, where yellow metal is considered the best safe haven investment and people buy gold for weddings and other ceremonies.

According to Hundia, gold sales and demand are plunging to negligible levels because of high prices. “Gold and jewellery sector is reeling under a crisis because of high prices and retrenchments across sectors,” he said. Gold prices which in December was from Rs 13,505 for10 grams moved to an all-time high of Rs 16,000 per ten grams last week.

Analysts and India trade bodies have predicted that gold prices could zoom to Rs 17,000 per ten grams by April this year.

They also say that if this lowest level of gold intake continues in India, 2009 will be the worst year in this decade as far as gold imports are concerned.

But despite the gloom in gold imports and sales in India, bullion traders hope that the gold market might pick up in April-May season.

The World Gold Council has predicted there will be a modest gain in gold purchases in India during the summer wedding season and the Hindu religious festival of Akshaya Tritiya. “There will be a modest growth of 10-15 per cent in the Indian domestic jewellery business,” said K Shivram, Vice-President, World Gold Council.

Shivram says gold sales will pick in April-May-June after the dull season of December and January.