Gold imports likely to drop 87% this month on high prices, weak demand

India’s gold imports are set to fall to the lowest in the last three years in view of soaring prices and sharp fall in demand.

The bullion industry has been reeling under huge inventory as it imported huge quantity of gold in anticipation of higher demand. The industry had imported 110 tonnes of gold in February expecting further rise in prices. The high prices dented demand completely and there are no takers for consignment even at a discount of $25 per ounce, said industry sources.

In the current situation, imports will not be more than 15 tonnes – a drop of 87 per cent- this month given that the international prices have remained firm, he said.

In past month, domestic spot gold prices have rallied by ₹4,436 per 10 grams or 7 per cent. On Thursday, they ruled at ₹67,252 per 10 grams against ₹62,816 logged on March 1, per the Indian Bullion and Jewellers Association of India.

Spurred by weak global economy

Kavita Chacko, Research Head (India), World Gold Council, said international gold prices reached a new record in early March, rising well above $2,100 an ounce and increasing more than 6 per cent in March on back of weaker economic data in the US, a decline in the US dollar, a fall in US Treasury yields and geopolitical tensions.

In India, she said gold prices have also crossed the all-time high though the rise in percentage terms was slower than the US due to rupee strengthening against dollar.

With the slack demand, jewellers are offering discounts and special schemes to attract buyers despite fast approaching Akshaya Tritiya, an auspicious occasion to buy gold. This apart, most of the impulsive buyers of gold jewellery from affluent class are attracted by the bullish equity markets.

Sporadic buying

Suvankar Sen, Managing Director & CEO, Senco Gold and Diamonds, said the demand is hit temporarily whenever gold prices go up steadily as buyers wait for prices to come down.

However, he said with expectation of prices touching ₹70,000 per 10 grams there are sporadic buying for the forthcoming wedding season.

Senco Gold has launched a discount of ₹200 per gram for customers who give money and book their jewellery in advance for Akshaya Tritiya which falls on May 10 this year, he said.

“If the gold prices goes up on next month, customer will get the price on the day when they gave money for booking the gold jewellery and if prices fall they get to buy more gold at then prevailing price,” he said.

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