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India's gold imports drop 33% in October as high prices hurt demand

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India’s gold imports drop 33% in October as high prices hurt demand

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(Kitco News) Imports of gold in India dropped 33% in October as surging prices continued to weigh on consumer demand during the festival season.

Gold imports were down at 38 tonnes in October despite being one of the most auspicious times to buy gold in India, said BMO Capital Markets managing director of commodities research Colin Hamilton.

“High prices put off buyers of jewelry. With 71 auspicious days in the Hindu calendar across 2019 (vs. 31 in 2018), Indian demand was expected to be strong this year; however, so far the story this year has revolved around central bank buying from China and Russia,” Hamilton wrote in a note on Monday.

This is the fourth month in a row that India’s gold imports were down with domestic gold prices hitting record-high levels this year. In September, India’s gold imports were down 68%, touching three-year lows.

“In value terms, the October imports were at $1.84 billion, slightly higher than last year’s $1.76 billion,” Reuters reported citing a government source.

The end of October was marked by the Diwali celebrations — the most auspicious time to buy gold jewelry for Hindus.

The biggest cloud over the festivities was the gold prices, which surged in domestic currency to record highs in September. Since then, prices have lowered but remained in the higher-end of their trading range.

“Certainly what we’ve seen over the last four-five weeks was that the local Indian gold market has been non-existent,” Rhona O’Connell, INTL FCStone head of market analysis of EMEA and Asia regions, told Kitco News in October. “What we’ve had were record-high prices in rupee-terms.”

Also, there is a new import tax of 12.5% and a sales tax of 3% to remember, added O’Connell.

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