India’s gold imports in Feb to hit 20-year low on record high prices: Report

India’s gold imports are likely to plunge 85% year-on-year to around 15 metric tonnes in February, hitting their lowest level in two decades due to record-high prices, Reuters reported, citing people aware of the development.

The decline in imports could help narrow the country’s trade deficit and support the rupee, which is hovering near record lows against the US dollar.

“Banks and jewellers have cleared a very small amount of gold from customs so far this month. Unless prices crash in the next 2-3 days, we are unlikely to see any improvement in the import numbers,” Reuters quoted an unnamed government official as saying.

India, the world’s second-largest consumer of gold, has imported an average of 76.5 tonnes of gold in February in the past decade.

However, the surge in domestic prices to an all-time high of ₹86,592 per 10 grams last week has hit demand, according to the report.

Some banks have reportedly even moved imported gold stored in customs-free zones in India to the US, where prices are offering a premium.

The sharp drop in imports comes despite the ongoing wedding season, which traditionally boosts demand for gold jewellery, a key part of bridal trousseaus and gifts.

Spot gold prices hit a record USD 2,956.15 per troy ounce on Monday.

In the domestic market, gold prices rose ₹350 to trade near record highs at ₹89,100 per 10 grams in the national capital, according to the All India Sarafa Association. Gold of 99.9% purity had closed at ₹88,750 per 10 grams on Friday.

In futures trading, gold contracts for April delivery on the MCX appreciated ₹118 to ₹86,128 per 10 grams, while Comex gold futures for April delivery were quoted higher at USD 2,954.71 per ounce.

The rally in gold prices is expected to persist as safe-haven demand remains strong, with central banks globally continuing to accumulate gold as a hedge against economic and policy uncertainties.