Gold imports by India, the largest user, climbed to a record in 2010, driven by a surge in jewelry demand and amid expectations that the 10-year rally in prices would extend, according to the World Gold Council.
Purchases totaled 918 metric tons, according to provisional data released by the producer-funded group today. That exceeds the projection of about 800 tons made last month by Ajay Mitra, the group’s managing director for India and the Middle East.
“Jewelry demand has been outstanding,” he told reporters today in Mumbai. “The price is no longer a barrier. Even at record prices, Indian consumers have opted for gold.”
Bullion advanced 30 percent last year, reaching a record $1,431.25 an ounce on Dec. 7, as investors bought the metal as a protector of wealth. Jewelry demand in India jumped 69 percent in the year to the highest ever, helping drive global demand to a 10-year peak, according to the council.
“Indications of the first month of the year has seen a very strong demand, so the momentum continues,” Mitra said. “There is every reason for us to believe that demand will be robust” this year, he said.
Fourth-quarter imports rose to 265 tons from 204 tons a year earlier, the group said. Jewelry demand gained 47 percent to 210.5 tons and investment demand grew 15 percent to 74.40 tons. Total demand in the period climbed 37 percent to 284.9 tons, according to the report.
Consumer demand for bullion in India rallied 66 percent in 2010 to 963.1 tons from a year earlier and more than doubled in value to $38.2 billion, the council said.
“The rising price of gold, particularly in the latter half of the year, created a ‘virtuous circle’ of higher price expectations among Indian consumers, which fueled purchases, thereby further driving up local prices,” the council said. “India was the strongest growth market in 2010.”