Mumbai: India’s gold imports in the first quarter of this year fell by 83% as higher prices and deteriorating domestic economic conditions slumped the consumer demand, the World Gold Council (WGC) said on Wednesday.
“Jewellery demand is unlikely to return to more positive territory in current market conditions,” said Aram Shishmanian, CEO of World Gold Council in a statement.
India’s gold imports in January-March period stood at 17.7 tonnes. Gold prices in India, the world’s top consumer, in the January-March quarter rose by 11%, after having struck a record high of Rs16,040 per 10 grams on 20 February, as concerns about global economic recession spurred safe haven purchases.
The gold contract in the continuation chart traded 0.29% lower at Rs14,279 per 10 grams at 2:00pm.
Consumers scaled down on their expenditure including that on gold jewellery as domestic economic conditions worsened, said Ajay Mitra, managing director of Indian subcontinent, the World Gold Council.
India’s economic growth slowed much more than expected in the December quarter to 5.3% against 8.9% the year earlier, slumping to its weakest pace in almost six years.
According to the council, India’s gold imports in 2008 fell 14% to 660.2 tonnes in 2008.
During the Jan-March period of 2009, 20 tonnes of gold was exported as traders took advantange of disparity in prices, Mitra said.
As Indian prices fell below global rates, an arbitrage window opened for traders stuck with high stocks in a domestic market awash with gold, as scrap sales surged as much as four-fold.
“With re-exports out of the way and supply chain holding lesser stocks and also with economy reviving, we expect traders to replenish these stocks,” Mitra told Reuters over telephone.
The Reserve Bank of India restricts the trade of bullion to prevent it from affecting the partially convertible rupee, but value-added gold, such as jewellery or coins can be exported.