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India's September gold imports surge as prices correct ahead of festivals

IBEF:  October 05, 2021

India’s gold imports in September 2021 surged 658% from last year’s lower base as a correction in local prices to the lowest level in approximately six months encouraged jewellers to step up purchases for the upcoming festive season, a government source said.

Elevated imports by the world’s second-biggest gold consumer could support benchmark gold prices, which have plunged nearly 15% from an all-time high of US$ 2,072 in August 2020.

The rise in imports could boost India’s trade deficit and put pressure on the rupee.

India imported 91 tonnes of gold in September 2021, compared to 12 tonnes a year earlier, the source said on condition of anonymity as he is not authorised to speak to media.

In value terms, September 2021 imports rose to US$ 5.1 billion from US$ 601 million a year ago, he added.

India’s gold imports in the September 2021 quarter spiked 170% from a year ago to 288 tonnes, the government official said.

“Previous month global prices were correcting, and rupee was gaining. The combination brought down local prices considerably and granted jewellers to stock up,” said a Mumbai-based dealer with a gold importing bank.

Local gold futures fell to Rs. 45,479 (US$ 611.93) per 10 grams last week, the lowest in almost six months.

Retail demand has been expanding and jewellery stores are registering decent footfall, the dealer said.

The country’s gold imports in October 2021 could rise more than 100 tonnes from 45 tonnes a year earlier if prices continue to be stable around the current level of Rs. 46,300 (US$ 623.35), said a Kolkata-based bullion dealer.

“Retail consumers are now moving out for shopping. The concern of coronavirus has been getting down with a drop coronavirus cases,” the dealer added.

Indian authorities imposed localised lockdowns in the June 2021 quarter as COVID-19 infections rose to a record high, but allowed businesses to reopen in a phased manner as cases dropped.

(US$ 1 = Rs. 74.3200)

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.