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Gold July 10, 2017 09:07:05 AM

India imports more gold in H1 than all of 2016

Anil Mathews
ScrapMonster Author
Lower gold prices, stocking in preparation for the new GST, cited as factors
India imports more gold in H1 than all of 2016

Mining - Gold is once again pouring into India following the cratering of physical demand for the precious metal last year to a seven-year low.

A collapse in demand from India, the backbone of the global physical trade for decades, was behind the weakness, but Chinese appetite for gold also waned significantly in 2016; strength in the US dollar also crimped demand.

However, physical demand for gold has been surging in India since January, following a plan by the Indian government last November to "demonetize" the equivalent of US$220 billion in large Indian bank notes – an astounding 86% of the circulating currency – which had a disastrous effect on the gold trade, and other sectors of the Indian economy that are reliant on cash transactions.

Quoting data from GFMS Thomson Reuters, Business Standard reports that India imported 521 tonnes of gold between January and June, versus 510 tonnes in all of 2016.

Value-wise, the H1 figure for gold imports was $22.2 billion versus $23 billion for 2016. If those numbers hold up, the annual total could surpass 900 tonnes, or $40 billion, which would be the strongest year since 2012, according to Business Standard. Over the past five years, the average amount of gold imported to India was 709 tonnes.

Business Standard cites lower gold prices and retailers stocking gold in preparation of a new good and services tax (GST), as the main reasons behind the pickup in gold demand. The long-awaited GST is India's biggest tax overhaul since independence in 1947, and will replace a slew of federal and state levies when it's rolled out in July. But the tax could be tough for small gold retailers to handle.

Gold imports in April, during the annual Hindu and Jain holy festival of Akshaya Tritiya, more than doubled from a year ago to 75 tonnes during a festival that prompts gold jewellery purchases, Reuters reported in May.

In 2015 Economic Times reported that the Indian public hold 20,000 tonnes of the yellow metal in jewellery, coins and gold bars.

Courtesy :mining.com

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