India Gold Bullion Sales Up 23% This Year Says UBS

SALES OF Gold Bullion to the world's biggest gold market have soared this year, a leading investment bank said Wednesday.

UBS reports that its Gold Bullion sales to India so far this year are up 23% compared to the same period last year – while sales last month were up 76% from April and 161% from May 2010. 

The combined value of all India's gold and Silver Bullion imports, meanwhile, was six times higher in May than April, and 22% up from May 2010 – thanks in part to higher prices

"While import volumes rather than values would be much more accurate, given the run-up in gold and Silver Prices in May, the figures still provide a good indication of the country's robust appetite for precious metals," wrote Edel Tully, precious metals strategist at UBS in London.

"Rapid inflation is eroding the earnings of the common man," adds Standard Chartered bullion analyst Sudhir Chakraborty.

"One has to understand how the import of gold has reached $9 billion for a month, while the yearly average is around $22 billion."

Figures published last week show India's benchmark wholesale price inflation rose to 9.06% in May, up from 8.66% in April.

The India Meteorological Department predicted this week that this year's monsoon rain could be 5% below its 50-year average. Lower rainfall could lead to lower farm production and potentially exacerbate inflationary pressures.

Gold Bullion demand from India amounted to 963.1 tonnes in 2010 – a 66% rise on the previous year – according to data from the World Gold Council.

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