Import defies high gold prices, Ahmedabad sets 6-year record

Gold buyers in Ahmedabad are on a high, and that is why the import of yellow metal has seen a six-year high despite the price touching Rs21,000 per 10 gram. While Ahmedabad imported 248.41 metric ton of gold till February this year for 2010-11, it had imported 215.52 metric ton in 2009-2010 when the prices were in the range of Rs15,000- Rs17,000 per 10 gram.

In the past six financial years, gold import into the city was 233.16 metric ton in 2005-06 when the price was Rs6,000-Rs8,000 per 10 gram. But in 2010-11, when the price remained between Rs16,500 and Rs21,000 per 10 gram, the import volume crossed what it was six years back.

“Since 2005-06, gold import was never imported beyond 235 tonne at Ahmedabad. This year, it has touched 248.41 tonne, that too in eleven months till February. Compared to 2009-10, the gold import at Ahmedabad has increased by more than 15% in 2010-11,” said CEO of GSEC Ltd, Samir Mankad. GSEC Ltd manages air cargo at Ahmedabad airport.

Over the past six years, gold import was lowest in 2008-09 at 154.73 tonne. Compared to that year, gold import has shot up by 37% this year to 248.41 tonne.

Gold traders and analysts revealed that the highest demand for gold this year came from the rural areas, particularly from farmers.
“In last one year, farmers have minted huge money by selling out real estate properties. The money was then diverted into gold. It is not that urban areas don’t buy gold but rural areas contributed the most in gold demand in last one year,” said Manoj Soni of AB Jewls.

The present gold buyers are probably the same who missed the opportunity two years back. “Two years back, due to global recession and slowdown in India, many could not invest in gold. Now, they don’t want to miss it again. The import has gone up because the demand is aggressive,” said bullion trader and analyst, Girish Chokshi. According Chokshi, people have understood that gold is the right avenue to hedge against rising inflation.   

"In the whole year, there were certain days, particularly festival days, when the bullion was out of stock. There was so much of demand that 10 gram gold biscuit was not available and customers had to wait for three days to a week to get it,” he said. Soni, however, said that gold import would start declining soon. “It seems the demand has come to peak and now we are expecting a fall in demand. In the next six months, the gold import is expected to fall.” 

Citing reasons, Soni said that both the real estate and stock markets are stable. “In case of real estate, correction has almost started and so liquidity may not flow to farmers. Hence, it will affect the demand for gold,” he said.