India’s gold imports in September rose 31 percent from a year ago as jewellers increased their purchases ahead of a festival at the end of the month, provisional data from GFMS showed.
Higher purchases by India, the world’s second-biggest consumer, could lend support to global prices that are trading near their highest level in a week. The higher imports may also widen the South Asian country’s trade deficit.
The country’s imports were 48 tonnes in September, Sudheesh Nambiath, a senior analyst with GFMS, a division of Thomson Reuters, said on Tuesday.
Much of the gain last month was simply due to the Indian holiday of Dussehra being celebrated on Sept. 30, rather than in October last year, as the holiday shifts since it is based on a lunar calendar.
Gold buying during Dussehra is considered auspicious.
“This year since Dussehra was advanced by a fortnight, import numbers for September are looking better than last year,” said a Mumbai-based bullion dealer with a private bank.
However, the September figure was lower than the monthly average for 2017 of 75 tonnes, because buyers were wary of purchasing gold since purchases were counted under the Prevention of Money Laundering Act (PMLA) beginning in August.
“Dussehra demand was weak due to the PMLA,” said the Mumbai dealer.
Indian jewellers thought the PMLA required them to keep records of customers’ personal identification number or tax code for transactions above 50,000 rupees ($765.58), which limited gold sales by buyers hesitant to give the information.
Indian authorities on Friday withdrew the amendment that made jewellers subject to anti-money laundering legislation.
Excluding the jewellery industry from the PMLA will help in reviving demand, but still sentiment is weak, said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.
Gold demand usually strengthens in the final quarter as Indians gears up for the wedding season as well as festivals such as Diwali and Dussehra.
The country’s imports in October could rise above 70 tonnes as banks and other importers are increasing overseas purchases for the Diwali festival, said Nambiath of GFMS. The festival falls in the middle of October this year. ($1 = 65.3100 Indian rupees) (Reporting by Rajendra Jadhav; Editing by Christian Schmollinger)