Imports likely down 30% as gold hits all-time rupee high
Gold rose Rs50, briefly reaching an all-time high of Rs29,590 ($600) per ten grams in Delhi on Monday following India's Akshaya Tritiya festival last week.
Gold has gained Rs650 over the last week and a half reports MyIris News quoting All-India Radio.
A new duty import duty and high prices thanks to a weak currency – the rupee has dropped 19% over the last year and could drop further – suppressed gold buying at the festival, the second most important event on the Indian gold calendar after Diwali in November.
Gold consumption was likely to have fallen by as much as 50% to 10 tonnes at the festival, Prithviraj Kothari, president of the Bombay Bullion Association told Indian Express ahead of the holy celebration day.
The Association said earlier in April Indian imports could tank 40% in the second quarter after a strike by gold traders over the doubling in excise duty of the yellow metal to 4%.
India is the world's number one importer of gold and consumption on the sub-continent could fall 30% to 655 tonnes this year from a record 969 tonnes in 2011 according to a Reuters poll held at the end of March.
Only the value of India’s crude oil imports top that of gold and the country's trade deficit is now the highest in more than 30 years.
A recent study by the country's central bank said a drop in the price of gold would not pose a systemic risk to the country's financial system but would in fact be beneficial.
According to the research by Australia’s Macquarie last year, Indian households are hoarding 18,000 metric tonnes of gold, equal to 50% of the country’s GDP.