After having a subdued few months, gold imports have started rising again. Data from the ministry of commerce shows that gold imports surged in June. More important, India is estimated to have imported 302 tonnes in the April-June quarter. According to Reuters, India’s gold imports in the first half of 2017 crossed the entire imports of 2016 as the country imported 510 tonnes in 2016, while imports in the January-June 2017 period were 521 tonnes. Although many are saying this increased demand is primarily due to hoarding by jewellers and traders owing to roll-out of GST, which increased tax rates on gold to 3% from 2%, it is not clear if the trend will continue in the coming months.

India has always been known for its gold appetite. While the government had thought that the monetisation scheme would curb this insatiable demand , given the limited secondary markets for these bonds and pricing, they have not been able to make much of an impact. Despite nine tranches, there is little to show in terms of progress and the market still accounts for a minuscule proportion of total gold trade.