Caledonia Mining Corporation (TSE:CAL)

[NYBob]

Gold Imports by India Likely Reached Record, WGC Says
January 12, 2011, 4:25 AM EST
By Madelene Pearson
Jan. 12 (Bloomberg) --

Gold imports by India, the biggest bullion consumer, likely reached a record last year driven by investment demand, according to the World Gold Council.

Purchases were about 800 metric tons, compared with 557 tons in 2009, Ajay Mitra, managing director for India and the Middle East at the producer-funded group, said today in a phone interview from Dubai.

Imports at that level “would be the highest for India in its history,” he said. The group hasn’t released final data for last year. Purchases in 2010 may exceed 750 tons, Mitra said Nov. 17. The Bombay Bullion Association said Jan. 3 imports probably totaled 700 tons in 2010.

Gold for immediate delivery rallied 30 percent last year to reach a record $1,431.25 an ounce on Dec. 7 as investors bought the metal as a protector of wealth. Demand for bullion as an investment in India surged 73 percent in the year ended Sept. 30, according to World Gold Council data. Purchases by the Asian country this year will remain “strong,” said Mitra.

“Our assessment is demand will continue to be strong,” he said. “Price is no longer a factor.”

February-delivery futures on the Multi Commodity Exchange of India Ltd. was little changed at 20,455 rupees ($454) per 10 grams in Mumbai at 2:27 p.m. Prices reached an all-time high of 20,924 rupees on Dec. 7. Gold for immediate delivery rose 0.3 percent to $1,385.95 an ounce.

Investment demand for gold in India grew faster than the 62 percent gain in jewelry demand in the same period, according council data.

“It’s been demand driven with investment in mind,” Mitra said. “While jewelry is a form in which a lot of consumers do buy in India, the core proposition really is security for the future, which is the investment angle for buying into gold.”

--Editors: Ravil Shirodkar, Richard Dobson

To contact the report on this story: Madelene Pearson in Mumbai at [e-mail]

To contact the editor responsible for this story: James Poole at [e-mail]

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