Q2 gold imports at 3-quarter high

In the quarter ended September this year, gold imports jumped to a three-quarter high of an estimated 262.2 tonnes, owing to lower prices and higher import of dore gold, or unrefined gold, by refineries. Observers say the trend suggests "import is returning to the normal prevailing three years ago".

In the quarter ended December last year, imports stood at 292 tonnes, while the previous high was in the June 2013 quarter (333.6 tonnes).

In the September quarter this year, demand was high, as prices started falling since July-end, before being quoted at $1,072 an ounce at a global level and Rs 25,000/10g in Mumbai. Currently, gold is quoted at a discount of $6 an ounce to the cost of import.

An analyst tracking gold imports said, "Several gold refineries are jacking up capacities to benefit from the two per cent lower import duty on dore gold." Dore attracts eight per cent import duty and value addition is done in India, which saves on import costs. Dore imports in the past two months are estimated at about 60 tonnes on a gross purity basis; on a net purity basis, these are estimated at about 40 tonnes.

For the first nine months of this year, overall dore imports are estimated at about 220 tonnes on a gross purity basis.

In September, the demand was lower because high imports in August (113.6 tonnes) had left jewellers with inventories. Going forward, "if gold prices fall a bit, the demand will pick up", said the analyst quoted earlier.

"Indian demand for gold is positively correlated to higher GDP (gross domestic product), spending power and the monsoon," said a Natixis Commodity Research report released on Friday. It is expected imports will be high in the coming months because growth in India's GDP has been higher compared to its peers and the festive season in India is approaching.

During 2012-2014, average annual gold imports stood at 858 tonnes, according World Gold Council (WCG) data. So far this year, imports stand at 661 tonnes; the WGC estimates for the entire year, imports will touch 900 tonnes.