Gold imports suffered a severe blow during EX20 following a series of developments – the latest being the coronavirus pandemic – which, on the other hand, pushed up the price of the precious metal at record levels.
Imports are estimated at 559.6 tonnes for the year, which ended Monday. It is believed to be the lowest in at least a decade. In fiscal 19, gold imports totaled 775.4 tonnes.
In terms of return on investment in gold, 2010 was a fantastic year – it yielded 36% to Indian investors.
With the exception of the June quarter, demand remained generally moderate. Since July 5, the date on which the Modi-2 government presented its first budget and imposed an import duty of 12.5% on gold, demand has plummeted, even as the price of the metal continued to overcome geopolitical uncertainties and the trade war.
September was one of the worst quarters in terms of demand for gold in India, when demand fell to just 83.6 tonnes. The March quarter should be no different, with demand estimated at just 120 tonnes.
March could be worse for many years, with imports estimated to be only around 18 tonnes in the midst of the coronavirus pandemic and the national closure, said an industry player. Import in March 2019 was 72.5 tonnes, according to GFMS data.
Although markets remain closed after the nationwide lockout, some demand was observed last week when the price of gold suddenly corrected, but traders were unable to supply the delivery. Some have promised to deliver at a fixed price when the markets reopen.
In the weeks following the end of the foreclosure, demand for gold should also be reduced, as life will only slowly return to normal and consumers will cut back on discretionary spending. The head of a global metals research company in India has said demand for gold is likely to start to rebound from July, but will not be enough to offset the fall in fiscal year 2010.
Even on the price front, he sees consolidation continue for some time, and any major improvement only in the second half.
Akshaya Tritiya, considered the most favorable opportunity to buy gold and jewelry, will be the main indicator of the demand for gold in these times of crisis. It falls on April 26.