Hit by sharp rise in prices and weak demand, gold imports may halve this month to 15 tonnes against 30-35 tonnes logged in January.

Spot gold prices hit a record high of $2,956 an ounce on Monday and been hovering in the same range due to global economic uncertainty kicked off by new trade tariff imposed by the US.

Besides the weak demand, the industry has been facing funding crunch to place long term bet on gold and this will lead to imports falling to about 10-15 tonnes this month, the lowest in recent times, said industry sources.

Gold imports dropped to six month low of 30-35 tonne in January owing to high prices leading the pull-back in demand, he added.

Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, said gold imports are anticipated to decline 50 per cent this month due to low demand and record-high domestic prices.

The demand remains lacklustre despite the ongoing wedding season, which is usually considered the peak for gold jewellery demand, he said.

Moreover, he added that few banks have started sending gold that was initially imported into India to the United States, where returns are better on the back of higher premium.

The wholesale bullion market for jewellery manufacturers in India has been offering discount of $23 an ounce (equals to about 28 grams) against $3 an ounce in December as it could not find takers.

After a volatile price movement last year, consumers lapped up on gold jewellery last November when prices dropped suddenly. Gold imports last year was down 4 per cent to 712 tonnes against 744 tonnes in 2023, according to the World Gold Council data.

Firm Prices

The LBMA (London Bullion Market Association) gold price has surged by $286 an ounce or 10 per cent to $2,938 an ounce so far this year.

Domestic prices have been rising in line with international prices and jumped 14 per cent to a record ₹86,831 per 10 grams. The depreciation of rupee against dollar has pushed up value of gold in the domestic market.

Manav Modi, Senior Analyst-Commodity Research, Motilal Oswal Financial Services, said gold in the domestic front will continue to trade with positive bias and may touch ₹87,300 to ₹89,000 per 10 grams next month.

Exports Crash

Gem and jewellery export dipped 10 per cent last month to $1.97 billion against $2.19 billion logged in the same period previous year on back of geopolitical tension and global economic slowdown. Gold jewellery shipments declined 4 per cent to $868 million ($900 million) as the buying for wedding and holiday season slowed down.