By James Mathew
UAE and Switzerland are among the major exporting countries for refined gold to India
India’s gold imports have risen to a 5-month high of a little over 70 tonnes in November, up by 78 percent from the previous month.
Huge demand for restocking by traders and jewellery retailers after the Diwali sales is cited as the reason for the sudden spike in import of the yellow metal, the consumption of which has been on the slide in the recent months in India – the second biggest market in the word for the commodity.
Gold imports in October this year was to the tune of 40 tonnes.
“The Diwali sales of gold during the month of October amounted to about 30-35 tonnes. Since India's recent monthly average import was about 40 tonnes, it meant exhausting the stocks available with traders and jewelers,” Surendra Mehta, Secretary of the India Bullion and Jewellers Association (IBJA), told Arabian Business.
“The November high level of gold imports will not be maintained in the coming months and we expect gold imports to be about 50-55 tonnes this month (December),” Mehta added.
UAE and Switzerland are among the major exporting countries for refined gold to India. Ghana and Peru are the other source countries for India’s gold imports.
The wedding season during December-January, especially in the northern and westerhern parts of India, traditionally witness higher sales of gold jewellery.
“The expected higher demand on account of the on-going wedding season may push up gold imports this month higher than the recent monthly average of 40 tonnes,” Mehta said.
A jump in gold imports, like that of crude oil, exert pressure on India’s import bill, thereby on fiscal and current account deficits, as also on rupee value.
Mehta, however, said since the higher gold imports in November is seen as a one-time affair for restocking after the Diwali season, there may not be much of an impact on rupee exchange value against dollar.
Industry circles said a slight fall in gold prices to $522 to $530 per 10 gm in the recent weeks from a high $557 in September-October have also helped gold jewellery sales stabilising of late, after continuous slide in sales since early part of this year.
Mehta said the prices are expected to be range bound between $522 and $530 in the comings months, till another trigger for price volatility happens.
Gold prices are higher in India compared to international markets because of the 12.5 percent duty on imports.