Gold imports rose 33.34% to $46.14 billion in FY12, to 837 tonnes, or 1.5 times the pandemic low in FY2011 and 12% higher than the pre-pandemic annual average for FY2016-20 Is.
Gold imports rose 33.3% to 837 tonnes in FY12, or 12% higher than the pre-pandemic annual average for FY2016-20
Despite the World Gold Council forecasting a fall in consumer demand for the precious metal this financial year due to rising prices and record imports in the last fiscal, a report by a foreign brokerage suggested that demand would generally grow more than anticipated. May be because houses may fall. Raise the metal as a hedge against rising inflation.
Gold imports grew 33.3% to $46.14 billion in FY12, 837 tonnes or 1.5 times higher than the pandemic low in FY2011 and 12% higher than the pre-pandemic average of FY2016-20, Due to which the current account deficit has been seen at 3%. GDP, government figures showed last month.
Imports were only $34.62 billion in the pandemic-hit FY21.
After imports of a record $54 billion in FY13, inward gold shipments had been declining over the years, but began to rise again and jumped to $25 billion in FY21 and further to over $46 billion in FY22.
Gold imports are expected to decline marginally to $43 billion in FY13, according to a report released by UBS Securities India on Monday.
A spurt in gold imports widened the trade deficit to $192.41 billion in FY12, from $102.62 billion in FY2011.
India is the second largest consumer of gold in the world after China.
Imports are largely driven by the jewelery industry. Gems and jewelery exports grew nearly 50% to nearly $39 billion in FY22. According to RBI data, the current account deficit widened to $23 billion, or 2.7 per cent of GDP, in the first three quarters.
“Our regression analysis shows that a 1 per cent increase in inflation leads to a 2.6% increase in the demand for gold. While persistently high inflation, rising equity market valuations, recent losses in equity markets for retail investors and now Even lower deposit rates could have economic implications. “Make a case for gold as an alternative asset class for households in the near term,” UBS Securities India said in a note on Monday.
Gold has gained importance as an investment asset over the years, and is seen as a good hedge against rupee depreciation and inflation in the short term. Notably, gold’s long-term returns have outperformed equities and debt over the past 15 years, although these asset classes are moving in broadly the same direction, according to the report.
The report increasingly noted that higher prices, however, could act as a deterrent and stifle investment demand.
UBS chief India economist Tanvi Gupta Jain expects gold demand to slow to 750 tonnes in FY12 from 837 tonnes in FY12.
Apart from safe havens, there are indications that a broader strategic interest in gold is emerging. As the bulk of the country’s gold supply is imported, higher global prices, net imports could remain high at $34 billion or 1% of GDP in FY13, despite moderately soft demand in volume terms .
He attributed the marginal decline to higher global metal prices and softer domestic growth as real incomes were hit by rising energy prices, rising inflation and an incomplete recovery in the labor market.
UBS recently raised its gold price forecast, but maintained a downward price profile into early 2023, reflecting massive safe haven inflows following the Russian invasion of Ukraine in late February. Post-pandemic economic reopening, higher domestic savings and pent-up demand boosted gold demand in FY12, with imports recorded at 357 tonnes in the December quarter. But import/demand fell to 141 tonnes in Q4, down 60% from the third quarter, driven by higher prices due to the Russian invasion of Ukraine.
Families are becoming richer due to record high gold prices and their wealth (based on their gold holdings) has increased rapidly in recent years.
According to WGC data, Indians hold the largest gold reserves in the world at around 27,000 tonnes, accounting for 13% of the global stock and about $1.675 trillion or 53% of the FY22 nominal GDP.
In contrast, retail bank deposits accounted for about 46% of GDP as of December 2021, and the Reserve Bank has gold worth $48 billion in its gold reserves.