India’s gold imports slump to lowest since 2016 on record price

Gold bullion is displayed at Hatton Garden Metals precious metal dealers in London, Britain July 21, 2015. Gold was on the brink of five year lows on Tuesday, with more losses expected in the coming months following Monday's "bear raid" when sellers dumped an estimated 33 tonnes in just two minutes. REUTERS/Neil Hall

MUMBAI: Gold imports by India in July tumbled to the lowest monthly inflow in more than three years as demand paused following record high prices in the domestic market.

Overseas purchases fell 69% to 20.4 tons in July from 65.6 tons a year earlier, according to a person familiar with the data, who asked not to be identified as the information isn’t public. That would be the smallest monthly quantity shipped since at least March 2016, when imports fell to 17.7 tons as jewelers went on a nationwide strike to protest against an excise duty on jewelry, data compiled by Bloomberg shows.

Total shipments in India, which imports almost all the metal it consumes, during January-July rose about 20% from year earlier to 492.3 tons. Finance Ministry spokesman R.C. Joshi wasn’t immediately available for comment.

Gold has rallied to a six-year high in international markets as concerns over the escalating U.S.-China trade war boosted demand for havens. That has pushed up prices to a record high in India and combined with an increase in import tax last month, arrested imports. Shipments also fell as demand entered the lean season between June and August. Gold futures in Mumbai rose as much as 2% Monday to a record of 36,990 rupees ($526) per 10 grams.

"Physical gold demand in India will remain fragile due to higher prices following the global price movements and increased import duty,” Abhishek Bansal, chairman of Mumbai-based commodity trader ABans Group of Companies, said by mail. "Gold imports may also drop in the coming quarters due to weak demand and domestic scrap supply may increase to nearly 100-120 tons this year,” compensating for the drop in imports. - Bloomberg

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