MUMBAI (Reuters) - India’s second-biggest gold importer MMTC Ltd(MMTC.BO) expects to hike imports as the festival season and higher incomes boost consumer spending, Director Ved Prakash said, supporting record high prices.
State-run MMTC, which trades in a range of commodities, could raise gold imports in the October to December quarter to 55-60 tonnes, up 37 percent from last year, Prakash told Reuters on Thursday.
(For Slideshow: Shopping for gold, click here)
Imports in the current month, when gold hit an all-time high in the local market, are likely to be 25 tonnes, 39 percent higher than last year, Prakash said.
“We have been doing (selling) 1.5-2 tonnes on a daily basis,” Prakash said. “Last year the condition was different, we had a drought and the economy (in some countries) was just coming out of recession.”
India, the world’s largest market for gold, saw imports fall to their lowest level in more than a decade last year as a severe drought and high inflation reduced consumers’ spending capacity.
A more than adequate monsoon this year, stronger economic growth and some pent-up demand arising from last year have brought consumers back to the gold market in the August to November festival time, when spending is at its strongest.
Buyers have not even been deterred by soaring prices for the yellow metal.
On Thursday, India’s gold futures on the Multi Commodity Exchange of India Ltd (MCX) were 19,174 rupees per 10 grams, just 83 rupees under an all-time high of 19,257 rupees on Sept. 15.
“Retail customers are buying given the bullish outlook for prices. They are buying more of all denominations,” Prakash said.
“Rural consumers and others who have surplus (wealth) are investing into bullion from an investment point of view.”
To see a graphic on India's gold imports from Bombay Bullion Association, click here
MMTC could raise silver imports to 1,500-1,900 tonnes in 2010, up from 700 tonnes in 2009, Prakash said, as steep gold prices trigger demand for the less costly white metal.
“We have been doing good sales in silver because people are using silver medallions as a (cheaper) alternative to gold medallions,” Prakash said.
India’s silver demand also shrank last year as the metal, generally used to make jewellery and articles ranging from spoons to religious idols, rose on safe haven-led buying from global investors concerned over global economies.
Prakash said interest in precious metals as an investment only could boost India’s fledgling gold exchange-traded funds and he expects total gold collection to jump to 50 to 60 tonnes in two to three years, up from 12.13 tonnes now.
Prakash, who oversees all of MMTC’s gold imports, said he saw gold prices climbing further this year.
“With the U.S. economy not doing well, Chinese demand doing well, central banks buying gold, we feel there are factors that would be supportive for gold to go over $1,300 an ounce by December end,” he said.
On Thursday, spot gold in the international market was at $1,288.60 an ounce, a notch below its record high of $1,296 struck on Wednesday.
(Editing by Jo Winterbottom)
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