Mumbai: India’s July gold imports slumped by two-thirds to 7.8 tonnes from a year earlier as high prices dented demand in the world’s biggest market for the metal and a drought in some parts of the country could keep buying low, the the head of a trade body said on Tuesday.
Monsoon rains, crucial for India’s economy, have been 29% below average since the start of the season on 1 June and could hurt farm incomes in the hinterland and drive prices of food items higher.
“People don’t have money enough for essentials, why would they buy gold,” said Suresh Hundia, president of the Bombay Bullion Association, who had earlier estimated imports at 8-10 tonnes. Demand for gold usually rises during the festival months from August to November, when annual bonuses and weddings spur purchases.
Sales have picked up in August but they are not very robust because of firm prices, Hundia said.
High prices are also affecting demand. Gold on the Multi Commodity Exchange of India Ltd was at Rs14,879 ($305) per 10 grams at around 1:30pm, up 29% on year.
India, the world’s biggest consumer of gold, had imported 24 tonnes in July last year and a total of 396 tonnes in 2008, the Bombay Bullion Association data showed.
Imports from January to July have plummeted 56% to 71.6 tonnes, compared with the same period last year, it showed.
“Prices were too high,” said Hundia, explaining why imports fell last month against his estimates of 8-10 tonnes.