MUMBAI: Gold imports jumped to over $6 bn in May from around $1.7bn a month ago as consumers splurged on Akshay Tritiya after the Covid imposed lockdown in 2021 and 2020 threw a wet blanket over the previous occasions. A drop in price from over $1935 an ounce in April to around $1845 also spurred the revenge buying.
However, trade sources and economists expect demand to rationalise amid high inflation. By quantity also, imports in May are estimated at 100-plus tonnes as against 28.5 tonnes in April. The preceding month saw elevated prices crimping demand because of the war in Europe.
Dealers offered gold at a discount to the bank rate amid high prices and didn’t place many orders for import. Surendra Mehta, national secretary, India Bullion & Jewellers Association (IBJA) expects imports in FY23 to be below the previous fiscal year’s 868.5 tonnes. “High price inflation could impact gold jewellery demand as consumers would prefer to conserve cash and postpone purchases,” Mehta said.
Gold’s share in total imports for May stood at 7.72% as against 2.78% in April, which was widened the country’s merchandise trade deficit. “The mild sequential dip in non-oil exports amid a sharp jump in gold imports widened India’s merchandise trade deficit to a massive $24 billion in May 2022,” said Aditi Nayar, Chief Economist at ICRA.
“Based on the expectation that gold imports may reduce after the Akshaya Tritiya season, the trade deficit may demonstrate some moderation in the current month.” Debajit Saha, lead analyst, precious metals, Refinitiv, said, “India’s gold imports in May jumped 677% from a year ago to 104 tonnes amid price corrections.
Demand for gold increased in May owning to retail consumers’ rise in spends at jewellery shops to purchase gold (especially during Akshaya Tritiya). Also the ‘average’ price declined to $1845 an ounce in May from over $1935 in April. Dealers replenished their stocks. The demand for gold in India is expected to remain steady and drop below 750 tonnes in the current financial year.”