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The sharp decline in international gold prices triggered imports of gold by jewelers and traders in India during the month of August this year. Meantime, the rapid surge in gold imports has raised concerns with regards to the country’s ballooning current account deficit (CAD).
According to estimates provided by GFMS Thomson Reuters, India’s gold imports totaled nearly 100 tons in August 2018. This is more than double of the imports of 46.2 tons of gold in August last year. Consequently, the import bill for gold has doubled from the levels of $1.89 billion in August 2017. Incidentally, the average international gold prices registered a decline of 6.5% year-on-year in August 2018.
Jewellers, who were running on low inventory, have taken low gold prices as an opportunity to add to their inventory, ahead of the festive season, resulting in sudden jump in imports. The positive sentiment emerging out of the jewellery show held last month also triggered gold purchases.
The official figures also indicate that the unrefined gold dore imports by the country edged higher from 82 tons in April-July ’17 to 87 tons during the corresponding four-month period this year. Also, gold imported for round tripping by exporters has jumped higher from earlier average levels of 12 tons to nearly 20 tons of late. This gold is re-exported after making marginal value-addition.