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India 2011 Gold Imports May Rise

March 8, 2012 - Updated 1253 GMT (2053 HKT)

STORY HIGHLIGHTS

Rising investment demand, driven mainly by record prices, is likely to push India's gold imports to around 1,000 tons

The world's largest consumer of the precious metal imported about 958 tons in 2010.

In India, jewelry still accounts for more than 60% of total demand, but rising prices have attracted consumers more to bars, coins and exchange traded funds

Spot gold prices in Mumbai, the country's biggest bullion trading hub, hit a record 29,270 rupees ($558.5) per 10 grams last week

Rising investment demand, driven mainly by record prices, is likely to push India's gold imports to around 1,000 tons for the 2011 calendar year, a senior executive with a top bullion importing bank said Thursday.

The world's largest consumer of the precious metal imported about 958 tons in 2010.

"This year, jewelry demand has fallen... but investment demand has compensated for that," Rajan Venkatesh, managing director of India bullion at The Bank of Nova Scotia, told reporters on the sidelines of an industry conference.

In India, jewelry still accounts for more than 60% of total demand, but rising prices have attracted consumers more to bars, coins and exchange traded funds over the past few months. Gold has given higher returns than any other asset class in the past one year.

Overall jewelry demand during the first nine months of this year fell to 464.4 metric tons from 471.9 tons a year earlier, while investment demand grew nearly 26% on year to 296 tons, according to the World Gold Council. Spot gold prices in Mumbai, the country's biggest bullion trading hub, hit a record 29,270 rupees ($558.5) per 10 grams last week due to a weak rupee.