Gold imports plunge in India as second wave of Covid-19 slashes demand

Gold imports by India plummeted in May after a deadly new wave of the pandemic shuttered stores and restricted mobility, wiping out demand during key festivals and weddings.

Inbound purchases slumped to 11.3 tons last month from 70.3 tons in April, according to a person familiar with the data, who asked not to be identified as the information isn’t public. Still, that’s higher than the 1.3 tons imported in May last year when the country had come to a standstill due to a nationwide lockdown. Finance Ministry spokesman Rajesh Malhotra didn’t immediately respond to calls to his mobile phone.

Economic recovery and lower prices had pushed up gold purchases in the world’s second-biggest buyer earlier this year after being slammed in 2020. However, a resurgence in coronavirus cases prompted many regional governments to impose restrictions on non-essential businesses and movement, cutting demand once again.

Demand slumped during the second-biggest gold buying day in the Hindu calendar last month, when virus infections overwhelmed the country’s run-down health infrastructure even as the protracted pandemic wave shrinks incomes and wipes out savings.

“The decline has been largely due to the second wave of Covid and lockdowns being imposed in several states, but we expect imports in June to be better as these states gear up to reopen,” said Harish Galipelli, director and head of strategy at Hyderabad-based Ila Commodities India Pvt. “However, we have seen a sharp rally in prices, which may hamper buying momentum in the local markets.”