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Informist, Thursday, Aug 22, 2024

 

By Sandeep Sinha

 

MUMBAI – Gold imports in India fell to 38-42 tn in July from 43.1 tn in June due to weak demand and record high prices, trade and industry sources said. India had imported 62.7 tn of gold in July last year, the commerce ministry data showed. July is a seasonally weak month for gold purchases because of fewer wedding days and farmers getting busy with sowing kharif crops.

 

On Jul 18, gold prices hit an all-time high of 74,538 rupees per 10 gm on the Multi Commodity Exchange of India and on Jul 17, they touched a fresh high of $2,488.4 an oz on COMEX. The rise in gold prices was in part led by expectation that the US Federal Reserve would cut interest rate following Chief Jerome Powell comments that economic data gave confidence that inflation in country was headed towards the 2% goal. 

 

"The yellow metal imports fell marginally due to a sharp rise in the domestic prices and gold being imported in the form of platinum," said Surendra Mehta, national secretary at India Bullion and Jewellers Association. "In Jul-Aug, demand mostly came from business-to-business segment as they started taking orders in advance for festive season starting September onwards," Mehta said.

 

"August is generally a strong month for gold demand in India, as wholesalers and jewellers stock up on new pieces of jewellery before the festivities and wedding season from September to January. And as the auspicious period begins in August, we will see good demand this month, as retail investors want to take benefit of lower gold prices," said Prithviraj Kothari, managing director of RiddiSiddhi Bullions.

 

Kothari said that a large cut in import duty on gold from 15% to 6%, as well as the subsequent decrease in the landed cost of gold, has boosted demand in the country. "After the Budget announcement, local gold prices, which had been trading at a discount for five months, began trading at a premium to international prices, indicating good market sentiment," he said.

 

Trade data released by the commerce ministry on Aug 14 showed the value of gold imports fell 10.7% on year to $3.13 bln in July, from $3.5 bln a year ago. The monthly provisional data released by the ministry gives the import data only in value terms.

 

For Jan-Jul, the country's gold imports growth turned negative for the first time in 2024, falling over 2.5% on year to around 344.1 tn from 353.6 tn in the year-ago period.

 

During Jan-Jun, for which the official data is available, Switzerland was the largest bullion exporter to India, followed by the United Arab Emirates, South Africa, Peru and the Dominican Republic. During the period, the country imported 108.67 tn gold from Switzerland, 57.39 tn from the UAE, 32.35 tn from South Africa, 28.16 tn from Peru, and 16.20 tn from the Dominican Republic, the commerce ministry data showed.

 

"Indian consumer demand – the sum of jewellery and bar and coin demand – could see an additional 50 tn or more in the second half of 2024," said Kavita Chacko, research head, India, World Gold Council, in a note. "This is through a combination of an initial boost in consumer appetite given the more attractive price as well as a longer-term effect as local prices align more closely with the international price," she said.

 

India, the second-largest consumer and importer of gold after China, imported 734.3 tn, 713.31 tn, and 1,067.7 tn of gold in 2023, 2022, and 2021 respectively.  End

 

US$1 = 83.95 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

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