India’s gold imports in January plunge 76% to 32-month low on weak demand

India’s gold imports in January fell 76 percent year-on-year to a 32-month low on weak demand after domestic prices rose to record highs and jewelers postponed purchases in hopes of a cut in gold prices. import duties, according to a government source.

Lower imports from the world’s second-largest gold consumer could weigh on benchmark gold prices, but the drop could help narrow India’s trade deficit and support the ailing rupee.

The country imported 11 tons of gold in January, compared to 45 tons a year earlier, the source said on condition of anonymity as he is not authorized to speak to the media.

In value terms, imports fell to $697 million in January from $2.38 billion a year earlier, he said Thursday.

Local gold futures rose to a record high of 57,270 rupees per 10 grams in January, stifling retail demand expected to improve during the ongoing wedding season, said a Mumbai-based dealer with a private bank that imports precious metals.

Weddings are one of the biggest drivers of gold purchases in India, as bullion in the form of jewelery is an essential part of a bride’s dowry and also a popular gift from family and guests.

Jewelers and bullion dealers hardly bought bullion in the second half of January as they had expected the government to cut import duties on gold in its annual budget to curb the increase in smuggling, said a New Delhi-based bullion trader with a private Bank.

India did not lower the import duties on gold in its budget presented on February 1, but increased the import duties on silver.

Local gold prices are down nearly 5 percent from all-time highs and this has helped attract consumers, the New Delhi-based dealer said.

“Imports should improve in February. Precious metal dealers and jewelers should stock up for the wedding season,” he said.

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(This story has not been edited by News18 staff and was published from a syndicated news agency feed)