India's Gold Import Boom Cools as Prices Rebound
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India's gold imports, which surged to a record high in November, are set to slow dramatically in December as rising prices prompt buyers to delay purchases, reports Reuters.
The sharp decline in imports, which could fall by more than 50% from the previous month, could help stabilize global gold prices and support the ailing Indian rupee, the news agency notes.
"Last month, imports shot up thanks to strong demand for investment and jewellery," said Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA), to Reuters. "But now, things are cooling off, and imports are slowing down."
November saw a record $14.8 billion in gold imports, more than double the October figure, as buyers rushed to capitalize on price corrections after a record high in October. This surge contributed to a record trade deficit and pushed the rupee to an all-time low.
However, with gold prices rebounding in December, many potential buyers are hesitant to purchase, leading to a projected decline in imports to around $5 billion for the month, according to a Mumbai-based dealer with a private bullion importing bank.
"So far this month, we have received fewer gold consignments for clearing compared to last month," noted a customs official to Reuters.
The weakened demand has also prompted Indian dealers to offer discounts of up to $8 an ounce over official domestic prices, a sharp contrast to the premiums of up to $16 observed in November.
"In November, investment demand was robust as bullion was offering better returns than the stock market," Kothari explained to Reuters.
The November surge in gold imports was partly attributed to festive season demand, as jewelers sought to replenish stocks following Dussehra and Diwali, according to Amit Modak, chief executive of PN Gadgil & Sons.