India’s gold imports fell for a sixth straight month in July as sluggish demand and record high discounts prompted banks and refineries to reduce overseas purchases of bullion, provisional data from consultancy GFMS showed on Monday.
Lower demand from the world’s No.2 gold consumer could hurt global spot prices that are trading near a two-year high, but help the south Asian country to reduce trade deficit. Gold is one of India’s biggest expenses on its import bill.
India’s gold imports in July are estimated at 20 tonnes, GFMS data showed, the lowest since March and down 79.3 percent from a year ago.
“Demand for imported gold fell sharply as discounts (to the global spot benchmark) were in the range of $50 to $100 in cash market through the month,” said Sudheesh Nambiath, a senior analyst at GFMS, a division of Thomson Reuters.
Dealers have been offering record discounts to lure buyers, but demand remains bleak with customers more eager to sell old jewellery and bank profits at current high prices.
“In the last two months, scrap supplies have risen substantially. It has reduced the need of new imports,” Bachhraj Bamalwa, director at All India Gems and Jewellery Trade Federation, told Reuters.
Local gold prices jumped to 32,455 rupees ($486.44) per 10 grams in July, the highest in nearly three years.
Gold is trading at a heavy discount also due to rising supplies from unofficial channels, Bamalwa said.
Smuggling of the precious metal has risen in India since the government imposed a 10 percent import duty in 2013.
India’s gold imports in the first seven of months of 2016 slumped 57 percent from a year ago to 215 tonnes, according to GFMS. Arrivals in 2016 are likely to reach 600 tonnes, the lowest since 2003.