High Prices to Dent India's June Gold Imports

Source:

". . .recent record high prices are dissuading fundamental demand."

India saw a sharp cut in imports in June, signaling recent record high prices are dissuading fundamental demand even as the world's largest ETF reports record holdings.

India's gold imports in June are likely to fall for the third straight month from a year ago, the head of Bombay Bullion Association said Monday.

"Imports might be 75% less than last year. It is because of the high prices," Suresh Hundia, president of the BBA told Reuters, adding the estimate was provisional and actual figures would be released in a few days.

India imported 29.9 tons of gold in June 2009.

The SPDR Gold Trust said its holdings rose to a record high at 1,316.177 tons as of June 24 from the previous high of 1,313.135 tons set on June 22.

Gold prices have reached new highs in the international market on persistent worries about the strength of the global market recovery, hitting above $1,264/oz. in late June.

Spot gold traded above $1,256/oz. Monday around 0955 GMT.

The front-month gold futures on the Multi Commodity Exchange of India Ltd (MCX) struck an all-time high of 19,198 rupees ($416) per 10 grams on June 8, marking a 32% annual rise.

Economic worries, such as Eurozone sovereign debt woes have triggered a flurry of buying activity in the international market this month.

But in India—where gold is widely gifted in religious celebrations and weddings, as well as a key input for its large domestic and export-focused jewelry industry—price-sensitive buyers have turned away.

"The numbers are so bad, nobody wants to share it this time," he said referring to the importing banks and trading agencies, which contribute data to the trade body.

Gold imports, which began 2010 on a strong footing, slackened from April as rising prices and volatility struck demand.

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