Gold imports are set to decrease sharply this month, potentially halving to 15 tonnes compared to 30-35 tonnes in January. The surge in gold prices to a record high of $2,956 an ounce has dampened demand, leading to a funding crunch in the industry. As a result, imports are expected to drop to around 10-15 tonnes, the lowest in recent times.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, stated that the decline in imports is due to low demand and the high domestic prices. Despite the ongoing wedding season, which typically boosts gold jewellery demand, the current lackluster demand persists. Additionally, some banks have started redirecting imported gold to the United States for better returns.
The wholesale bullion market in India is offering a discount of $23 per ounce, a significant increase from $3 per ounce in December. This drop in demand comes after a brief surge in gold jewellery purchases last November following a sudden price drop. In 2024, gold imports were down 4% to 712 tonnes compared to 744 tonnes in 2023.
The LBMA gold price has risen by $286 per ounce to $2,938 so far this year. Similarly, domestic prices have surged by 14% to a record ₹86,831 per 10 grams, driven by the depreciation of the rupee against the dollar. Manav Modi, Senior Analyst-Commodity Research at Motilal Oswal Financial Services, predicted that gold prices in India could reach ₹87,300 to ₹89,000 per 10 grams next month.
On the exports front, gem and jewellery exports fell by 10% last month to $1.97 billion amid geopolitical tensions and a global economic slowdown. Gold jewellery shipments declined by 4% to $868 million as demand for weddings and holidays waned. Overall, the industry is grappling with weak demand and high prices, leading to a significant drop in gold imports and exports.
