India's demand for gold should be robust in 2011 despite the likelihood of higher prices, pushed by geopolitical tensions, a senior World Gold Council executive said on Thursday. Indian consumers, who tend to invest for the long term, were unlikely to be deterred by expected higher prices on the back of tensions in the Middle East and the crisis in Japan, said Ajay Mitra, managing director of the World Gold Council for India and Middle East.
"The first two months (January-February) seem to be good I think right up till May the demand will be solid," he said. The traditional Indian wedding season is currently underway and there are also some festivals coming up, occasions when Indians traditionally buy gold. Mitra said current global crises could keep prices high but their impact was hard to predict. "In the past we have not had these kinds of incidences, so it is very difficult for us to say what shape this price increase is going to take or how long," he said.
"If we do have similar instances around the world as we are witnessing in the Middle East there will be a run I think for some time on the price." The price of the most active gold contracts on the Multi Commodity Exchange is broadly flat since the start of the year but hit an all-time high on Thursday. In 2010, India's total annual demand hit 963.1 tonnes, up about 70 percent over 2009, Mitra said.
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