INDIA’S gold imports are set to tumble 85 per cent in February from year ago levels to their lowest in 20 years, with demand sapped by record prices for the precious metal, a government official and three bank dealers said.
Lower gold imports could help India narrow its trade deficit and support the rupee that is trading near a record low against the US dollar. India is the world’s second-biggest consumer of the precious metal.
“Banks and jewellers have cleared a very small amount of gold from customs so far this month. Unless prices crash in the next two to three days, we are unlikely to see any improvement in the import numbers,” said a government official, who declined to be named as he was not authorised to talk to the media.
Spot gold prices hit a record high of US$2,956.15 per troy ounce on Monday.
India’s gold imports in February are likely to fall to around 15 metric tonnes, the lowest for the month in at least two decades, from 103 tonnes in February 2024, the official added.
In the past decade, on average, India imported 76.5 tonnes of gold in February.
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“The price surge killed demand, and we were stuck with the gold we brought in January. No point in importing more in February,” said a Mumbai-based bullion division head of a gold importing bank.
In India, domestic prices rose to a record 86,592 rupees per 10 grams last week.
Another Mumbai-based bullion dealer said at least two banks moved imported gold that was stored at a customs-free zone in India to the US as the Indian market was trading at a discount.
“When the US market is offering nearly a 1 per cent premium, there’s no point in selling in India by offering a US$35 per ounce discount,” he said.
The sharp drop in February imports was unusual for the jewellery industry, as the wedding season is ongoing in the country, when usually demand rises, said a Kolkata-based bullion dealer.
Weddings are a major driver of gold purchases in India, with bullion in the form of jewellery forming a crucial part of a bride’s attire and a popular gift from family and guests. REUTERS