Indian Gold Imports Said to Jump to Year’s High in Novemberby and
Jewelers replenished stockpiles after top festival of Diwali
Cash crunch to hurt demand, imports going forward: Bamalwa
Gold imports by India, the second-biggest consumer, are said to have climbed 10 percent in November to the highest this year, according to a person familiar with provisional Finance Ministry data. Demand increased as jewelers built up stockpiles for the marriage season, a trade group said.
Overseas purchases rose to 111 metric tons from 101 tons a year earlier, the person said, asking not to be identified as the data aren’t public. For the 11 months through November, shipments slumped 43 percent to 513.9 tons from a year earlier, according to provisional ministry data compiled by Bloomberg. Finance Ministry spokesman D. S. Malik declined to comment on the data.
Consumption is on track to drop to the lowest in seven years in 2016 because of higher prices, an excise tax on jewelry and the government’s push to bring more transparency to the financial system where gold is used as a home for undeclared income. Prime Minister Narendra Modi dealt demand another blow when he scrapped notes of higher denominations, reducing cash supply.
“Imports rose as jewelers restocked after Diwali,” Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, said by phone from Kolkata, referring to the festival of lights. “There was bit of demand in the initial part of November because of demonetization, but after that there have been no purchases at all.” Imports will slide from this month as the cash crunch weakens demand, he said.
Indians have a tradition of buying bullion during festivals and for marriages as part of the bridal trousseau or gifts. The country’s main festival season starts in August, concludes with Diwali some time in October or November, and is followed by the wedding season. The nation imports almost all the gold it consumes and demand was 858 tons in 2015, World Gold Council data show.