India’s gold imports hit a 13-year low in 2009, as price-elastic consumers abstained from fresh buying in the first quarter. Although the trend had changed by the second quarter and continued so, full recovery wasn’t seen.
A Report published by the World Gold Council (WGC), the body funded by global miners, showed India’s total import at 459 tonnes in 2009, the lowest since 1997. This was the first time in 13 years when India’s annual gold imports fell below 500 tonnes.
In the first quarter, the imports were miniscule, at 42 tonnes. But, the scenario changed gradually towards the end of the year, with the end-quarter arrivals up to 180.7 tonnes, higher by 17 per cent from the 154.4 tonnes in the earlier quarter and 13 per cent more than the 159.6 tonnes in the corresponding quarter of the previous year. The year 2007 had seen an import of 741 tonnes, as consumers anticipated a rise in prices. The current level is Rs 17,000 for 10g. “A correction is due, which may happen anytime,” said Gnanasekar Thiagarajan, director of Commtrendz Research, an independent advisory firm.
Suresh Hundia, president of the Bombay Bullion Association, said that if the price declined, imports will automatically increase. Domestic consumers sold back significant amounts of jewellery in the first quarter of 2009, expecting the opportunity to buy it back at a lower price. As the year progressed, wedding-related purchases were delayed, as the waiting game continued, and many consumers satiated their demand by exchanging old jewellery for new.
Further, the rural community started spending some of the savings it had held in cash deposits, while some parts of the country experienced healthy demand from non-resident Indians coming home for their winter vacation. In turn, the increase in activity saw retailers start to rebuild their inventories, reversing some of the run-down that occurred earlier in the year.