India's May gold imports plummet as price rally dents demand
India's gold imports plunged a fifth straight month in May to 48 tonnes as a rally in local prices to near their highest level in 21 months curtailed retail purchases, provisional data from precious metals consultancy GFMS and bank dealers showed.
The 60 percent drop in purchases from a year ago by the world's No.2 consumer could weigh on global prices that are still up 4.5 percent from a mid-December trough despite having fallen back from a 17-month high touched at end-January.
Lower gold imports could also help the South Asian country reduce its trade deficit.
"Local prices jumped due to the depreciating rupee and dampened retail purchases," Sudheesh Nambiath, a senior analyst with GFMS, a division of Thomson Reuters, said on Wednesday.
Local gold prices have risen more than 5 percent so far in 2018.
India had imported 119.3 tonnes of gold in May 2017 as jewellers increased purchases to replenish inventory and stocked up ahead of the implementation of a new national sales tax from July 1, 2017.
The country's gold imports in the first five months of 2018 fell 39.4 percent from a year ago to 274.2 tonnes, data compiled by GFMS showed.
"There were fewer auspicious days for weddings in May due to Adhik Mass. It hit purchases for weddings," said a Mumbai-based bullion dealer with a private bank.
Adhik Maas is an extra month in the Hindu calendar that started on May 16. It is considered inauspicious and people avoid weddings, buying gold or property during the period.
Gold is an essential part of a bride's dowry in India and also a popular gift from family and guests at weddings.
India's imports in June would also remain blow 50 tonnes due to higher prices, said Mukesh Kothari, director at Mumbai bullion dealer RiddiSiddhi Bullions.
"Gold has been trading in discount in local market. Jewellers are not interested in building stocks at the current price," Kothari said.
(Reporting by Rajendra Jadhav; Editing by Tom Hogue)