India’s gold imports more than doubled last month ahead of the start of key festivals in the world’s second-biggest bullion consumer.
Inbound shipments last month climbed to 35.5 tons (32.2 tonnes) from 14.8 tons a year earlier, according to a person familiar with the data, who asked not to be identified as the information is not public.
Imports were also higher than July’s 25.5 tons.
Indian Ministry of Finance spokesman Rajesh Malhotra did not immediately respond to a call to his mobile phone.
The rebound in demand follows a nearly 80 percent drop in imports between January and June, and comes as India slowly eases restrictions on movement and economic activity put in place to control the COVID-19 pandemic.
The country is about to enter its key season for weddings and festivals, peaking with Diwali in November, which usually sees gold demand rise as buying and gifting the precious metal is considered auspicious.
Still, expectations for a substantial recovery are muted, as prices remain near record levels and India is headed for its first annual economic contraction in more than four decades.
“The liquidity is going to be tight in the market and prices are also high, so buyers will cut down” on how much they buy, said Harish Galipelli, head of commodity and currencies at Inditrade Derivatives & Commodities. “I don’t see any major upswings in imports going forward.”
While demand has improved to about 20 percent of normal business from 15 percent previously, it is currently an inauspicious period to buy gold, said N. Anantha Padmanaban, chairman of the All India Gem & Jewellery Domestic Council.
Purchases might not pick up until about the middle of next month, during the festival of Navratri, he said.
Spot gold on Friday fell about 0.1 percent to US$1,920.70 an ounce, down 2.4 percent for the week. Silver on Friday rose 0.1 percent to settle at US$26.62 per ounce.
Separately, the Philippine central bank has said that it is shifting to active gold trading as the monetary authority seeks to better manage the country’s international reserves, Governor Benjamin Diokno said yesterday.
The bank has moved from “passive” gold trading because of a change in the price dynamics of the metal, a new law that makes purchases of it from small miners more attractive and the country’s record-high reserves, Diokno said in a text message to reporters.
Studies show that the optimal portfolio mix of gold to reserves should be 9.8 percent, while a World Bank survey suggested about 9.55 percent, Diokno said.
The Philippines’ ratio exceeds 10 percent.
The Bangko Sentral ng Pilipinas “will always be opportunistic in its reserves management,” the central bank governor said.
The country posted gross international reserves of US$98 billion at the end of July.
Additional reporting by staff writer
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