Is it true that gold imports by India are falling? If that is the case, then why is the price of gold still going up?
Answer
Answer
Yes, that is correct that gold imports have fallen sharply and that is a positive outcome of the sharp spike in gold prices. Imports of gold for the month of February fell to just 46 tonnes from a level of 77.64 tonnes a year ago.
Demand for gold was robust in the first half of February but then demand tapered as prices crossed Rs.43,500/10 grams in sync with global gold prices. Central banks generally frown upon gold imports as it dissipates precious foreign exchange without any productive output.
However, these imports hardly define gold prices and these prices are determined by ETF buying, central bank buying and the extent of uncertainty in the global markets.