India’s daily gold imports — after the government’s demonetisation move — beat purchases from overseas even in the build-up to the Dhanteras (considered an auspicious occasion to buy the precious metal) on October 28.
Gold imports witnessed an over tenfold spurt to Rs 2,229.1 crore on November 10 and rose even further to Rs 2,374.4 crore on November 11, compared with just Rs 215.6 crore on November 8 when the government decided to make R500 and R1,000 notes invalid as legal tender from midnight.
However, imports on November 12 dropped to just Rs 379 crore as rural demand got hit due to cash crunch and the government warned of strong action against unscrupulous elements taking advantage of the situation.
The initial spurt suggests many jewellers moved to replenish stocks as inventory was drained to cater to huge demand following the demonetisaiton move.
Gold prices touched a three-year high of R31,750 per 10 gram in Delhi last Wednesday, as people flocked to jewellery stores since Tuesday night. The gold prices effectively shot up to R45,000 per 10 gram or more that night in some places because people were willing to exchange the currency notes even for lower value while buying the precious metal.
However, jewellers have said since the government has restricted the amount of cash that can be withdrawn from banks, footfall has decreased substantially, especially in rural India, the biggest market for the precious metal.