MUMBAI: India’s gold imports are likely to hit a more than two-year low in February, as rising prices and hopes for a cut in import taxes keep buyers away, industry sources said.
While lower purchases by the world’s second-biggest consumer could dent the current rally in global bullion prices, it would mean relief for the Indian government which has been struggling to curb gold imports that cost the country $36 billion in 2015. India’s imports of the metal are expected to drop to 25 tonnes in February, according to a median of estimates from five industry participants, including bank dealers and traders.
That would be about 67 percent below month-ago levels and the lowest since September 2013, when arrivals were hit by a government mandate to export a fifth of all gold imports. “Banks and trading agencies have scaled down imports. They are being forced to offer heavy discounts (to global prices) to clear inventory,” said Bachhraj Bamalwa, director at All India Gems and Jewellery Trade Federation, pointing to weak demand.
Global spot gold prices hit a one-year peak of $1,260.60 an ounce this month amid volatile financial markets, and are currently at $1,216. Prices have risen 15 percent over two months, their biggest such rally since August 2011. Dealers in India are offering record high discounts of up to $50 an ounce to the spot benchmark to lure buyers, but there are no takers, the industry participants said.
Jewellers and retail consumers are delaying purchases in the hope prices will correct and that India will cut its import duty by 4 percentage points in this month’s budget, said Sudheesh Nambiath, a senior analyst at consultancy Thomson Reuters GFMS.
