India Gold Imports Drop 58% as Domestic Prices Trade Below Import Parity
Gold imports into India fell to USD 2.3 billion in August, a 58% year-on-year decline. This drop reflects strong domestic supply and a widening discount against international prices.
Gold imports into India fell to USD 2.3 billion in August. This represents a 58% year-on-year decline. The drop follows a 45% month-on-month reduction. Domestic prices now trade at a significant discount to international levels. This pricing gap reduces the incentive for importing raw gold bars.
The World Gold Council reported that jewellery demand softened in recent weeks. Consumers delayed purchases due to sharp price volatility. Retailers held back on inventory buildup. Wedding-related demand remained relatively stable. However, buyers shifted toward lighter-weight pieces.
Domestic Prices Trade Below Import Parity
The discount between domestic and international gold prices widened in August. It reached USD 78 per ounce by September 11. This is nearly 2% below the landed cost. In July, the average discount was USD 34 per ounce. Local supply appears adequate relative to current demand.
Exchange of old gold for new jewellery boosted local supply. This activity helped keep domestic prices low. Unofficial supply channels also contributed to the widening discount. Imported gold dore became less attractive for refiners. This occurred despite a 0.65% duty advantage over bullion.
Jewellery Demand Softens Amid Price Volatility
Kavita Chako, WGC Research Head for India, noted a wait-and-watch mode among consumers. The August price rally and subsequent pullback caused hesitation. Discretionary purchases were deferred. Large retailers responded by launching faster-moving products. They adjusted marketing strategies to promote quicker sales.
Investment demand remains steady. Some investors are shifting from physical gold to digital forms. Market participants remain cautiously optimistic for the festive season. However, elevated prices may continue to constrain discretionary buying. Manufacturers reported delays in order uptake by retailers.
Import Volumes And Market Share Decline
Import volumes in August were estimated at 15 to 20 tonnes. Gold’s share of total merchandise imports eased to 3%. This compares to 9% a year earlier. The decline suggests existing domestic supply met expected demand. Lower dore shipments also contributed to the drop.
