Sale of gold on the auspicious occasion of Dhanteras this year was 30 per cent more than the previous year. A staggering Rs 20,000 crore worth of gold was sold during the festival in 2020, according to the India Bullion and Jewellers Association (IBJA). According to IBJA data, the sale of gold on Dhanteras across the country this year was about 40 tonnes, valued at approximately Rs 20,000 crore. Last year, gold sales were about 30 tonnes, valued at Rs 12,000 crore.
Gold imports, which have a bearing on the current account deficit, declined 47.42 per cent to $9.28 billion during April-October due to fall in demand in the wake of the Covid-19 pandemic, according to data from the Commerce Ministry.
Imports of the yellow metal stood at $17.64 billion in the corresponding period of 2019-20. The imports, however, recorded a growth of about 36 per cent in October. Silver imports during the period too dipped 64.65 per cent to $742 million.
The decline in gold and silver imports has helped in narrowing the country’s trade deficit, difference between imports and exports, to $32.16 billion during April-October 2020-21 as against $100.67 billion in the year-ago period. Gems and jewellery exports declined by about 49.5 per cent to $11.61 billion in April-October 2020.
India is the largest importer of gold, which mainly caters to demand of jewellery industry. In volume terms, the country imports 800-900 tonne of gold annually.
Even though gold prices fell by 4.5% in the international markets last week, the decline is temporary as the yellow metal will maintain its lustre in Samvat 2077, the Indian business new year. According to experts, despite the slowdown in the global economy, chances of yet another fiscal stimulus and rising inflation will contribute to the rally in gold prices in the coming months.
Due to uncertainty over the US-China trade war and then the Covid-19 pandemic, gold saw a bull run in Samvat 2076, clocking returns of 30.1% in rupee terms and 25% in dollar terms. Experts believe that the long-term outlook for gold remains positive because the global economy is facing a slowdown after the pandemic and will take time to recover.
Additionally, markets are expecting yet another fiscal stimulus when Joe Biden assumes office as President, which will lead to an increase in the gold prices.