Gold Imports by India Seen Rising More Than Fourfold Last MonthPratik Parija
Gold imports by India, the largest user after China, probably surged more than fourfold last month on expectations declining prices would boost festival demand.
Purchases are estimated at about 95 metric tons compared with 15 tons to 20 tons in September last year, said Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation. The government raised import taxes for a third time in August last year after a month earlier obliging importers to set aside 20 percent of purchases for re-export as jewelry.
India represented 25 percent of global demand in 2013. Imports of gold were valued at $3.75 billion in September, 450 percent more than a year earlier, the Commerce Ministry estimates. Buying and gifting of gold is considered auspicious and the most favorable time is the festival of Dhanteras, two days before Diwali which occurs on Oct. 23. Festivals run through November and the wedding season follows to early May.
“These are normal imports before Diwali,” Bamalwa said in a phone interview from Kolkata today. “There is no abnormal feature. Prices have fallen in the international market and this is good for Indian consumers.”
Gold for immediate delivery fell 6.2 percent in September and dropped to $1,183.24 an ounce on Oct. 6, the lowest level this year, as the Federal Reserve prepared to end monthly bond-buying that had fueled gains in asset prices. Bullion traded at $1,224 today in London.
The government introduced import controls last year to stop a widening in the current account deficit and a decline in the currency. The three increases in taxes took the import duty to 10 percent. The curbs spurred smuggling and the country this year allowed more banks and traders to buy bullion overseas, which has eased inflows.
Jewelry and investment demand in India dropped 34 percent to 394.4 tons in the first six months, according to the data from the London-based World Gold Council. Imports may total 175 tons to 200 tons in the three months to December, Bamalwa said.