India, the largest importer and consumer of gold trimmed its gold imports to 131 tonne in the Apr-Jun quarter of 2012, down 170 tonne or a 57.48% decrease from the same period last year, a World Gold Council's (WGC) second quarter 2012 report said.
The near 60% decline is the largest year-on-year decline in gold imports in the last nine quarters. The fall can be attributed to a higher gold prices and declining consumer demand for gold jewellery and investment gold.
In the quarter, the average price of gold was $1,609 per 10 grams, 7% higher than average price in Q2 2011, thus affecting demand for the precious metal.
Jewellery and investment demand was low in the period despite the weak economic scenario. Gold demand for jewellery and investment in the quarter was down 38% at 181.3 tonne versus 294.5 tonne in the previous quarter, the report noted.
In 2011, India imported 969 tonne of gold, with the first and second quarter gold import amounting to 607 tonne, while this year the sum of the first two quarters in 2012 is only 340 tonne.
"A weak monsoon could hit Indian demand for gold in the second half of the current year, Ajay Mitra, managing director, India and the Middle East, World Gold Council,said on Thursday.
The Government has been discouraging import of bullion to conserve foreign exchange in these difficult times and the rise in import duty has been effective in reducing bullion import by as much as 50% in the first half of 2012, Prithviraj Kothari, President, Bombay Bullion Association Limited said.
As a result of this, there is poor quality gold available in the market. Recycled gold contributed to 55 tonne in the first two quarters of 2012 as compared to 59 tonne in 2011, the WGC report said.