India’s gold imports in 2019 fell 12 per cent from a year ago to the lowest level in three years as retail buying faltered in the second half after local prices rallied to a record high, reports Reuters.
Lower buying by the world’s second biggest consumer of the precious metal could weigh on global prices that jumped 18 per cent in 2019, but help New Delhi bring down the trade deficit and support the rupee.
India imported 831 tonnes of gold in 2019, down from 944 tonnes a year ago, the source said, who is not authorised to speak to the media. In value terms, 2019 imports fell nearly 2 per cent to $31.22 billion, he added.
Gold prices are hovering around Rs 41,000 per 10 gram. Similarly, silver prices also jumped Rs 960 to Rs 48,870 per kg from Rs 47,910 per kg. Gold had closed at Rs 39,900 per 10 gram last week.
In early trade on Friday last week, the rupee depreciated by 24 paise to 71.62 weighed by spike in crude oil prices, after US President Donald Trump ordered deadly strike on an Iranian commander.
General Qasem Soleimani, the powerful commander of Iran’s Revolutionary Guards, was killed in a precision US air strike in Iraq ordered by President Donald Trump, the Pentagon announced on Friday, dramatically escalating tensions in the strategic Gulf region.
The decline in gold imports has helped in narrowing the country’s trade deficit to $106.84 billion during the eight-month period under review as against $133.74 billion in the year-ago months.
Gold import had been recording a negative growth since July this year. However, it grew about 5 per cent to $1.84 billion in October and 6.6 per cent to $2.94 billion in November.
India is the largest importer of gold, which mainly caters to the demand of the jewellery industry.
To mitigate the negative impact of gold imports on trade deficit and CAD, the government increased the import duty on the metal to 12.5 per cent from 10 per cent in this year’s Budget. Industry experts claim that businesses in the sector are shifting their manufacturing bases to neighbouring countries due to this high duty.