India’s gold imports plunged 41% in February from a year earlier as a rally in local prices to a record high squeezed retail demand, a government source said on Tuesday.
The world’s second-biggest consumer of gold imported 46 tonnes in February, compared with 77.64 tonnes a year earlier, the source said on condition of anonymity as he was not authorised to speak to media.
In value terms, February imports totalled $2.36 billion, down from $2.58 billion a year earlier, he said.
In the first half of February demand was modest but it faltered as prices started rallying from mid-February, said a Mumbai-based dealer with a bullion importing bank.
Gold futures in India hit a record high of 43,788 rupees per 10 grams in February after rising nearly a quarter in 2019.
The weak demand forced dealers to offer as much $14 an ounce discount over official domestic prices in February, the most since mid-October. The domestic price includes a 12.5% import tax and 3% sales tax.
The Gem & Jewellery Export Promotion Council’s exhibition, where jewellers display their designs to buyers, witnessed a lower-than normal response in February due to a drop in overseas buyers, said a Mumbai-based jeweller.
India’s gold imports could fall below 35 tonnes in March as prices are still elevated, said another Mumbai-based dealer with a gold importing bank, which would mark a drop from last year’s 93.24 tonnes.
“Retail demand is very weak. It is unlikely to improve unless we see a meaningful correction in the prices,” the dealer said.