In September, India’s imports of gold and silver nearly doubled compared to August, despite record-high prices. Banks and jewelers hurried to stock up before the festive season and to avoid increased import taxes, according to trade and government sources.
India, the world’s second-largest gold consumer, is boosting imports, supporting gold prices that hit records this week, even as demand in China, the top buyer, remains weak.
The import surge might increase India’s trade deficit and impact the weaker rupee.
“Jewellers and banks have been clearing significant gold volumes from customs over the past two weeks,” noted an anonymous government official. “Such a rush hasn’t been seen in years.”
Customs cleared a larger volume of imports in September than in August, with even more expected on the month’s last day, ahead of a potential rise in the base import price of gold and silver.
The base import price, revised every 15 days by the government, determines the import duty.
Banks and bullion dealers are racing to clear imports before the new base price, expected to increase due to a global price surge, said Chirag Thakkar, CEO of Amrapali Group, a leading precious metal importer in Gujarat.
“Despite record highs in gold and silver prices, buyers continued pursuing them, and investment demand rose,” said Thakkar, whose company more than doubled its gold and silver purchases in September from August.
In August, India spent $5.4 billion on 64.17 tons of gold and $451.6 million on 410.8 tons of silver, trade ministry data reveals.
Trade data for September will be released by mid-October.
Indian gold futures reached a record of 116,900 rupees per 10 grams on Tuesday, while silver futures climbed to an all-time high of 144,330 rupees per kg.
Jewelers, who had waited for a price dip, are now paying a premium to stock up for the festival season as prices hit new highs, said a Mumbai-based dealer at a private bullion-importing bank.
Diwali, the festival of lights, will be celebrated in October, during which buying gold is considered auspicious.
This week, Indian dealers quoted a premium of up to $8 per ounce over official domestic prices, including 6% import and 3% sales taxes.
“India’s strong buying is surprising the market, especially with China’s inactivity at these levels,” said a Singapore-based bullion dealer.
In China, dealers increased discounts this month to $31 to $71 per ounce against global benchmark prices, the highest in several years.
