After losing to China its world gold buyer status, Indian gold jewelry demand has been forecast to grow 10 percent to 15 percent in 2012 on expectations prices of gold will fall in correlation to the rupee.

"For the whole year we will end up with a 5 percent to 7 percent volume growth ... (In 2012) I expect, as the prices of gold come down, it will once again catch up the momentum and will grow in volume by 10 percent to 15 percent, " Mehul Choksi, the head of Gitanjali Gems, India's biggest jewellery retailer, told Reuters on Sunday.

This is, however, contested by the forecast made by global financing firm BNP Paribas in December 2010.

BNP Paribas said India, the world's biggest hoarder of gold in 2010, apparently slowed down on its buying binge of the yellow metal. And with its economy forecast to grow 6.5 percent for 2011-12, analysts and experts said this will have a corresponding impact on the country's appetite for gold.

The Asian country's appetite for gold jewelry fell 26 percent in the third quarter of 2011 to 125.3 tonnes because of erratic price swings and a weaker rupee, the World Gold Council reported.

In 2010, India accounted for 19 percent of global demand for the metal. But because its economy is mainly reliant on the eurozone, which till now has to fully arrest its maddening fiscal crisis, India has experienced a drop in the value of its currency, the Rupee, making gold buying costly for the locals. Gold in India rose by as much as 34 per cent as of December last year.

Choksi remained confident the foreseen strong demand in jewelry will help Gitanjali boost it group revenues by 35 percent in the new financial year, starting March, from the $2 billion generated in the current year.

Earlier this month, the Bombay Bullion Association said it projects India's first quarter gold imports for 2012 falling 50 percent compared a year ago.

Imports of the yellow metal in the last quarter of 2011 slid 56 per cent to only 125 tonnes.

India imported 878 tonnes of gold in 2011 compared from 958 tonnes in 2010.

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