In April 2024, India experienced a significant increase in gold imports, more than doubling from $1.53 billion in March to $3.11 billion. This surge in imports is believed to be one of the reasons for the five-month high trade deficit of $19.1 billion. The price of gold in Delhi during this period ranged from Rs 76,400 to Rs 67,755 per 10 grams. The total gold imports for the year 2023-24 increased by 30 percent to $45.54 billion.
The unexpected downturn in the gold market in March, despite strong demand, was attributed to jewellers stocking up for the Indian wedding season. However, demand for gold revived in April due to the marriage season and increased purchases by the central bank, marking a significant turnaround. A senior government official mentioned that the doubling of gold imports in April is not abnormal and aligns with trends from the past decade. The surge in imports is also attributed to heightened global demand for gold amidst geopolitical tensions, leading to higher gold prices.
The World Gold Council’s Q1 2024 Gold Demand Trends report highlighted that central banks continued to purchase gold, adding 290 tons to their official global holdings during the quarter. This consistent and significant buying by the official sector emphasizes the importance of gold in international reserve portfolios, especially during market volatility and increased risk. Commodity market experts also believe that the increased gold imports could be influenced by factors such as geopolitical tensions, steady central bank purchases, and robust demand from emerging markets.
Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, noted that the drop in gold imports in March, attributed to high prices, could have led to the rise in April as buyers returned to normal patterns following a price-induced slowdown. In India, April marks the beginning of the wedding and festival season, which typically sees a surge in gold demand for jewellery purchases, explaining a portion of the increased imports. Manish Chowdhury, Head of Research at StoxBox, added that the shifting global power dynamics, trade tensions, and economic uncertainties have strengthened gold’s safe haven appeal. With concerns over inflation and potential economic risks, investors are turning to gold as a hedge against uncertainty.
Overall, the surge in gold imports in April can be attributed to a combination of factors such as increased global demand due to geopolitical tensions, steady central bank purchases, and seasonal demand in India during the wedding and festival season. The trend of central banks increasing their gold reserves amidst uncertainties further supports gold’s importance as a stable asset. With market volatility and economic uncertainties prevailing, gold continues to be a safe investment option for individuals and central banks alike.
