Indian Gold Imports Down in Q1, Q2 Purchases Also Seen Skidding

Gold imports by the world's leading buyer of the precious safe haven yellow metal fell more than 55 per cent in the first quarter of 2012, marred by the ongoing nationwide strike of gold bullion traders and jewelers protesting India's proposed hike in import duty on gold bars, coins and platinum.

In a report, the Bombay Bullion Association said India's imports of the precious metal fell to 90 tonnes during the January to March 2012 period, versus the recorded 283 tonnes in the same quarter last year. In January and February this year alone, India imported only 40 tonnes and around 30 tonnes of gold, respectively.

When the jewelers' strike started on March 17, gold demand further depressed. Gold imports reached only 15 tonnes to 20 tonnes in March, as against the estimated 50 tonnes to 60 tonnes in the same month of 2011, Prithviraj Kothari, president of the Bombay Bullion Association, said. The high prices of gold further discouraged new purchases of the metal, he added.

"There are hardly any imports. Whatever little banks have imported, it is quoting at a discount in the local market," Kothari said.

Second quarter purchases have also been forecast to plummet to 150 tonnes from the 250 tonnes registered a year ago, according to Puran Doshi of the Mumbai Wholesale Gold Jewellers Association.

Now into their third week of nationwide massive protest action, India's bullion traders and jewelers denounced government plans to increase to 4 per cent from 2 per cent the gold import duty in the country, claiming high interest rates coupled with inflation will affect buyer consumption of the safe haven metal and ultimately, also affect the country's importation of the precious metal.

Given these, Doshi said in Mineweb that overall gold imports in 2012 will most likely fail to even reach 500 tonnes. India's gold imports in 2011 totaled 969 tonnes.

Imports of another precious metal, silver, likewise fell in March to an estimated of only 20 tonnes, compared from 300 tonnes to 400 tonnes a year ago. Overall in 2011, India's silver imports reached 4,874 tonnes.

In January, India has already hiked the gold import duty from 1 per cent to 2 per cent.