The Hindu Business Line : Gold imports witness surge, reverse declining trend

Gold imports in August rose 47 per cent to 100 tonnes against 68 tonnes logged in July. In June, imports were only 24 tonnes against 45 tonnes in April.

Gold demand in August was about 5 to 10 times the average demand in the same period last year, said Ms Manasee S. Gokhale, economist, NCDEX. The last week of August has seen a record high demand on the back of a rising dollar and falling crude oil prices, which pushed down gold prices further down, she added.

Imports moved up 45 per cent in August, from 69 tonnes in the same month last year.

The yellow metal touched a low of Rs 11,374 per 10 grams in August from Rs 12,000 per 10 grams in July-end. Prices corrected from a record high of about Rs 13,800 per 10 gram in mid-July.

International gold prices tumbled below $800 an ounce in August, after hitting a four-month high of $988 in mid-July and a record $1,031 in March. Prices have since picked up and on Tuesday it was at $814.45.

Mr Harish Galipalli, Head of Research, Karvy Commodities, said that prices have plunged from $980 an ounce in end-June to $770 an ounce in August, recording a fall of 21 per cent.

“The prices had come down at the right time for the festive season when people consider it auspicious to buy gold,” he added.

The premium paid for import by jewellers has halved to about $3 a kg from $6 in mid-August. “The demand is still there, but it seems to be stabilising," said a Mumbai-based dealer. Improved local supplies and better stocks with retailers have also helped cool premiums.

The premiums for imports from Western countries and European traders have risen in India due to competition from Turkey, the third largest importer of the yellow metal. In August, Turkey imported 45 tonnes. Shortage in supply of physical bars also supported the rise in premiums, said the dealer.

Demand to stay

"The demand for imports is still good. There is no ready delivery available ... and international suppliers are giving about 5 to 10 days for delivery," he said.

Mr Suresh Hundia, President of the Bombay Bullion Association, said the prices are expected to be below the Rs 12,000 (10 grams) level with a downward pressure.

Analysts feel that the coming Dasera and Diwali festivals will spur demand even if prices reach Rs 12,500.

Despite a sharp rally in the dollar against major currencies, gold prices in India have not fallen as much as they have in some other countries, which indicate strong physical demand for gold in the coming months.

The rupee’s appreciation has also helped.

On Tuesday, standard gold prices fell by Rs 65 to Rs 11,680 per 10 grams, while pure gold was down by Rs 55 to Rs 11,755 per 10 grams.