Gold imports in October drop 33% as higher prices curtail festive buying

India`s gold imports in October fell a third from a year earlier, dropping a fourth straight month as near record-high prices dampened festive buying in the world`s second-biggest consumer of the metal, a government source said on Monday. Lower imports by the South Asian country could cap gains in global prices that are trading near their highest level in more than six years, and may also help New Delhi bring down its trade deficit and support the rupee .

India fills nearly all of its gold demand through imports. India imported 38 tonnes of gold in October, down 33% from 57 tonnes a year earlier, the source said on condition of anonymity as he is not authorised to speak to media. In value terms, the October imports were at $1.84 billion, up 4.5% from $1.76 billion last year, he said.

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Higher gold prices badly affected retail purchases during the Diwali and Dussehra festivals, said Surendra Mehta, secretary of the India Bullion and Jewellers Association. This year Indians celebrated both the festivals - for which buying gold is considered auspicious - last month. In September, local gold futures hit an all-time high of 39,885 rupees ($563.94) per 10 grams and have risen about 22% so far in 2019, tracking a rally in global prices and due to a depreciation in the rupee. [GOL/]

There could be a further drop in November. "Usually demand moderates after Diwali," said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in Chennai. India`s gold imports could fall below 30 tonnes in November, said a Mumbai-based dealer with a gold importing bank, which would mark a drop of two-thirds from last year`s 84.8 tonnes. "Unless prices correct significantly, say by around 3,000 rupees (per 10 grams), we won`t see a revival in the demand," the dealer said.