Mumbai: India, the world’s biggest buyer of bullion, may increase imports as jewellers take advantage of the lowest prices in more than seven months to rebuild inventories before the festival season.
Gold on Tuesday fell to the lowest since 21 December, tracking a global commodities sell-off, as gains in the dollar and lower crude oil prices eroded the metal’s appeal as an inflation hedge. Bullion reached a record $1,032.7 (Rs43,786.48) an ounce on 17 March. “Demand has been so much in the last couple of days that banks and other importers have run out of supplies,” said Suresh Hundia, president of the Bombay Bullion Association Ltd, which represents 230 trading companies. “If the price keeps falling, there’s no reason why people won’t continue to buy.”
A recovery in Indian demand may help stem a drop in gold, which led other precious metals including platinum and silver into a bear market after falling 22% from its March high. Increased consumption may benefit retailers including Rajesh Exports Ltd, the nation’s biggest jewellery producer, whose stock has plummeted 65% this year as record prices cooled sales.
Gold imports by India in the three months ended July likely fell by as much as 35% from a year ago after a 50% slump in the previous three months, said Ajay Mitra, managing director of the World Gold Council in India.