India’s October gold imports surge to 31-month high amidst drop in prices and festive demand

Higher imports by the world’s second-biggest bullion consumer could support benchmark gold prices, but may also widen India’s trade deficit and put pressure on the ailing rupee

Mumbai: India’s October gold imports surged 60% from a year earlier to a 31-month high as a drop in prices ahead of festivals prompted jewellers to ramp up purchases, a government source reported on November 20, 2023.

Higher imports by the world’s second-biggest bullion consumer could support benchmark gold prices, but may also widen India’s trade deficit and put pressure on the ailing rupee.

India imported 123 metric tons of gold in October, compared with 77 tons a year earlier, the source said.

The average monthly imports in October in the past decade were around 66 tons. In value terms, October imports nearly doubled to $7.23 billion from $3.7 billion a year earlier, he said.

At the start of October, local prices fell to their lowest level in 7 months, providing an opportunity for jewellers to stock up for festivals, said a Mumbai-based bullion dealer with a private bank.

“Jewellers were operating with lower stocks and were eager to replenish at the reduced price levels observed in October,” he said. Dussehra was celebrated in October and Diwali in November, when buying gold is considered auspicious.

“Local gold futures jumped to a record high of Rs 61,914 per 10 grams in November, but demand remained robust during Diwali,” said Amit Modak, CEO, P N Gadgil and Sons. “There was strong demand for coins and bars as people viewed gold as a long-term investment product, leading to increased purchases,” he added.

In November, gold imports could drop to 80 tons, which would still exceed last year’s 67 tons, given the improving demand during the upcoming wedding season

Courtesy: www.zeebiz.com