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Wednesday, December 19th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Precious Metals Imports Soar In India , Leaving Analysts Puzzled

Economists and analysts are left puzzled by the surge in imports of precious metals in India, amounting to $9 billion in just one month.
Between the months of April and May 2011, the import of gold and silver in India has increased by 222 percent, compared to the same period last year. Imports reached $9 billion in May alone, representing a 25 percent growth in the demand for gold.
India’s trade figures were recently released by Commerce and Industry Minister Anand Sharma, showing imports reaching a four-year high, predominantly as a result of rising oil prices and an increase in gold imports.
As a result of the increase in imports, India’s trade deficit has increased, with government authorities cautioning that it could reach a record $145-150 billion. The gap between imports and exports has widened to $15 billion – an increase of 67 percent.
Bullion analyst, Anand Patnaik, said about the recent developments in India: “Even as inflation and a widening trade deficit to $15 billion in May continues to weigh on the minds of Indian investors, the demand for fresh gold has continued to grow. This is very confusing, especially when one sees it against the backdrop of a 400% rise in the value of the rupee over the last decade.”
Rajesh Shukla from the Centre for Macro Consumer Research said that Indians often use gold as a hedge against inflation and that the high level of imports is reflecting a strong demand of gold despite a weakening of the rupee.
Monday saw the rupee fall to its lowest level in three weeks following losses in domestic shares and the euro. Oil companies’ dollar demand has also added pressure.
A forex trader at an Indian bank noted that as a result of rupee volatility, gold prices have come under pressure: “Gold futures will rise on a weak rupee, but demand in the local market is quite poor at the moment


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