NEW DELHI: Indian gold bar imports totaled 27 mt in July, down 62% from 72 mt a year earlier, preliminary customs data showed Tuesday. Imports were up marginally on the month, 1.7% higher than 26 mt reported in June.
Physical demand in India, the world’s largest consumer after China, has struggled this year amid high prices and a running dispute with the government over new taxes and proposed reforms to the industry.
Discounts to the international spot price of gold were reported at record levels of $65-75/oz in July, with cash discounts heard as high as $100/oz, as prices soared to 28-month highs in the days and weeks after the Brexit vote on June 23.
Sources on the ground have reported a complete stall in local demand due to high spot prices, with the country likely to fall well short of the 800-900 mt of gold it consumed in 2015.
GFMS Thomson Reuters last week reported a 56% decline in Indian jewelry demand to 69 mt in the second quarter compared with a year earlier. Total demand in the first half of 2016 was down 54% on the same period in 2015 to 142 mt.
“Exceptionally weak” Asian demand resulted in a 22% year-on-year fall in global physical gold demand in the second quarter to 715 mt, the analysts said.
Meanwhile, imports of gold dore — unrefined gold ore — dropped rapidly in July to 2.4 mt from 45 mt in June, customs data showed.
Dore imports jumped surprisingly in June having averaged only 5 mt/month from March to May; local refiners unable to turn a profit following the end of preferential taxation in February, in addition to substantial local discounts.
It was thought refiners were taking advantage of rising silver demand to import dore with higher silver content, backed up by the customs data.
This trend seems to have ended in July, despite silver prices holding firm close to two-year highs above $20/oz for much of the month.
The London Bullion Market Association Gold Price settled at 1,358.15/oz Tuesday morning, up $8.50/oz from the previous day’s close.
