It is time to bet on the yellow metal. With India's central bank, the Reserve Bank of India allowing seven more banks to import gold and silver into the country, the move is set to provide a major fillip to the country's gold starved citizens.
Gold continues to be one of the regulated sectors in India. The Indian government allows only state-run and private banks to trade in bullion at the wholesale and the retail level.
Though jewellers are also permitted to sell coins and bars through retail outlets, consumers throng to banks to get a purer variety of the precious metal.
While 23 banks already have the central bank's permission to import gold and silver into the country, the recent approval has brought the count to 30.
``The total number of banks that can ship precious metals in the country has risen to 30. This will now induce more customers to buy directly from banks. The year 2010 also provided the perfect setting for gold, especially in India, where the metal has given a return of over 19%, while the stock market (and Nifty Index in particular) gave only 15% return for the similar period,'' said Nagesh Zaveri, a bullion dealer with a nationalised bank in Mumbai.
Gold buying edged higher on Monday in Mumbai, as prices steadied near their three-week high. ``Deals are happening very fast as investors are intent on covering their position before the market moves higher,'' said a dealer with a state-run bullion importing bank.
In Europe on Monday, gold rose above $1,420 an ounce and within 1% of its record high. On Friday, Comex gold futures ended higher gearing towards its strongest annual gain in three years, supported by a languishing dollar.
Analysts pointed out that gold priced in euros, British pounds and Swiss francs rose to an all-time high last year, as the European Union bailed out Greece and Ireland.
Many traders have forecast that gold's rally is expected to continue this year too as inflation pressures continue to build and interest rates remain low. A turnaround in the US economy could however, play spoilsport, they have warned.
