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Informist, Monday, Oct. 28, 2024

 

By Sandeep Sinha

 

MUMBAI – Gold imports into India slumped to 50-55 tonnes in September from 135.88 tonnes in August, according to trade and industry sources. The drop was primarily due to domestic gold prices hitting a lifetime high, and a higher base from a month ago, as a cut in import duty had led to a surge in imports in August.

 

In September last year, gold imports into the country were at 70.81 tonnes, according to commerce ministry data.

 

On Sept. 25, gold prices hit all-time highs of INR 76,000 per 10 gm on the Multi Commodity Exchange of India and $2,708.7 an ounce on COMEX. The rise was led by an interest rate cut by the US Federal Reserve, a decline in the dollar, and geopolitical tensions in West Asia, which boosted safe-haven demand for gold. 

 

"The decline (in gold import) is primarily attributed to several factors, including record-high domestic prices which have discouraged both consumers and manufacturers from increasing their purchases," Prithviraj Kothari, managing director of RiddiSiddhi Bullions, said. "Many bullion dealers and manufacturers stocked up in August to prepare for the festive season, reducing the need for further imports in September."

 

Kothari added that after the reduction in import duty, there was an initial surge in demand, which was now stabilising.

Trade data released by the commerce ministry on Oct. 16 showed the value of gold imports rose 6.9% on year to $4.39 billion in September. Monthly provisional data released by the ministry provides the import data in value terms alone.

 

In value terms, bullion was the third-largest imported commodity, accounting for 7.9% of total foreign exchange outflows, after petroleum and machinery, electrical and non-electrical. In August, the share of gold in total imports was 15.6% at $10.06 billion.

 

For Jan-Sept, the country's gold imports were up 5% on year at 536.26 tonnes, according to trade sources.

 

"Gold imports are expected to remain relatively subdued in October due to elevated prices, though Dhanteras and Diwali could revive some demand. Retailers are employing various marketing strategies to attract buyers, but the overall sentiment will likely hinge on price stability and rural consumption driven by the festive and wedding season ahead," Kothari said.

 

A favourable monsoon and higher crop acreage this year are expected to boost rural incomes, potentially leading to higher gold purchases, Kavita Chacko, research head, India, World Gold Council, said in a note.

 

During Jan-Aug, for which 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 this period, India imported 164.75 tonnes of gold from Switzerland, 115.24 tonnes from the UAE, 44.03 tonnes from South Africa, 40.64 tonnes from Peru, and 21.68 tonnes from the Dominican Republic, according to commerce ministry data.

 

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

 

US$1 = INR 84.08

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

 

Edited by Avishek Dutta

 

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