India’s gold imports are anticipated to nosedive by more than 90 per cent in March, reaching their lowest point since the COVID-19 pandemic outbreak, according to a government official and two bank dealers cited by Reuters.
The drop comes as banks curtailed imports following a surge in prices, which dampened demand for the precious metal, a key element of Indian culture and economy. The world’s second-largest consumer of gold, India is witnessing a drastic reduction in imports, which is poised to influence global prices as well as narrow India’s trade deficit, providing support to the rupee.
A government official, speaking to Reuters on condition of anonymity as they were not authorised to engage with the media, disclosed that imports are projected to decline to a mere 10 to 11 metric tons in March from 110 metric tons in February.
The decline in imports is attributed to multiple factors, including the record-high prices of gold, which soared to Rs 66,943 per 10 grams earlier this month. Such unprecedented prices deterred buyers, with jewellers exhibiting reluctance to stock up despite the ongoing wedding season, traditionally a period of heightened demand for gold in India.
Mumbai-based bullion dealers from leading gold-importing banks corroborated the weak demand narrative, revealing that they imported minimal quantities of gold in March due to lackluster market appetite. Even with discounts exceeding USD 35 per ounce, jewellers remained reticent to make purchases, prompting dealers to refrain from importing the metal at exorbitant prices.
Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in Kolkata, highlighted to Reuters the challenges faced by refiners, who have nearly halted imports of gold dore, a semi-pure alloy. The market discount surpasses the duty advantage, rendering refining economically unviable.
India’s gold import dynamics bear significance not only domestically but also globally, as the country’s consumption patterns heavily influence global prices. With imports plummeting to historic lows, the ripple effects are expected to reverberate throughout the global gold market, impacting prices and trade dynamics.
(Inputs from Reuters)
