India's gold imports to plunge in December after record November
Price rise dampens gold demand in December
Dec imports seen falling to around $5 billion - dealer
Nov imports surge to record $14.8 billion
By Rajendra Jadhav
MUMBAI, Dec 17 (Reuters) -India's gold imports are poised for a sharp slowdown in December following record purchases in November, in the absence of any major festival and as rebounding prices prompt buyers to delay purchases, trade and government officials said.
Lower imports by India, the world's second-biggest consumer of the precious metal, could cap a rally in global prices XAU= that hit a record high in October. The drop in imports could also help India narrow its trade deficit and support the ailing rupee INR=IN.
"Last month, imports shot up thanks to strong demand for investment and jewellery," Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA), said.
"But now, things are cooling off, and imports are slowing down. We might see a drop of over 50% in December."
Gold imports more than doubled in November compared to the previous month, reaching a record $14.8 billion, which widened the trade deficit to a record level and pushed the rupee to an all-time low.
Many potential buyers had been waiting for gold prices to drop and rushed to make purchases as soon as prices corrected in November, said a Mumbai-based dealer with a private bullion importing bank.
Local prices MAUc1 declined to 73,300 rupees ($863) per 10 grams in mid-November after hitting a record high of 79,775 rupees in October.
Prices have rebounded in December, which is discouraging buyers and will likely lead to imports falling sharply to around $5 billion, the dealer said.
"So far this month, we have received fewer gold consignments for clearing compared to last month," said a customs official, who declined to be named.
Weak demand prompted Indian dealers this week to offer a discount XAU-IN-PREM of up to $8 an ounce over official domestic prices – inclusive of 6% import and 3% sales levies. Last month, they were charging a premium of up to $16.
In November, investment demand was robust as bullion was offering better returns than the stock market, IBJA's Kothari said.
India's NSE Nifty 50 share index .NSEI fell to 23,263.15 points in November, down 11% from a record high hit on Sept. 27.
Gold imports in November were also driven by festive season demand, as jewellers aimed to replenish stocks following the festivals of Dussehra and Diwali, said Amit Modak, chief executive of PN Gadgil & Sons, a jeweller.
($1 = 84.8990 Indian rupees)
Reporting by Rajendra Jadhav; Editing by Mrigank Dhaniwala
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