With the fall in gold prices internationally, jewellers and traders imported 100 tons gold in August to augment their inventories before falling rupee takes away the lower price advantage. However, the sudden jump in import has again raised current account deficit worries.
According to GFMS Thomson Reuters estimate, import of gold in India was 100 tons as compared to 46.2 tons in August last year, resulting in doubling of import bill for gold in August. Gold import bill for August 2017 was $1.89 billion. Import growth in tons is 116.5 but the average gold price in the international market in August was down 6.5 per cent compared to previous August.
Sudheesh Nambiath, head, India Gold Policy Centre said, “Jewellery show held last month has shown good turnout and jewellers were low on inventories. This has resulted in a sharp jump in gold import in August as prices were also low and jewellers considered it the right time and price to add inventories.”
Interestingly, some exporters are also importing gold and re-exporting those with marginal value addition to pocket arbitrage benefits. This is also known as round tripping. GFMS estimates that round tripping-related monthly gold import was averaging 12 tons earlier which has increased to 20 tons of late and hence net gold import for the domestic market is not that high.
Nambiath said the Kerala floods will also impact gold demand as the southern state has some 15 per cent share in domestic demand. Considering all these factors, jump in gold import in August is not a worry.
A leading gold refiner stated that there has been a spurt in dore or unrefined gold which is helping value addition to be made in India in terms of refining. In April-July 2017, 87 tons dore (in terms of refined gold from that) was imported against total import of 323 tons while this year during the same period 82 tons dore imported against four month total import of 267.7 tons making imports of dore as a per cent of total import much higher, said GFMS estimates.