Heraeus: India gold imports hit a three-and-a-half-year high

India’s gold imports shot to their highest level since early 2021, while silver coin sales from major mints are well off the pace of 2023 this year despite the gray metal’s strong price performance, according to precious metals analysts at Heraeus.

In their latest precious metals update, the analysts said that India’s gold imports have hit a three-and-a-half-year high in preparation for strong seasonal demand.

“Strength in consumer demand and industry restocking ahead of Diwali and the rest of the festive season in Q4 saw India’s gold imports surge to a more than three-year high of 125 tonnes in August,” they wrote. “This marks an increase of 58% year-on-year and 212% month-on-month. Imports were supported by cuts in import tariffs on precious metals in July."

"Consumers who were delaying purchases of jewellery and bullion owing to the rising gold price in H1’24 likely took the lowering of tariffs as an opportunity to spend," they added. "The local price of gold in India averaged a discount of $8.2/oz during August, though following a big swing from discount to premium in late July, the market appears to be more normalised, with steady demand above the pre-tariff reduction levels (source: World Gold Council). Any correction in the gold price is likely to lead to restocking by retailers, which will keep import volumes elevated.”

The analysts noted that India remains the second-largest consumer gold market, and the subcontinent accounted for 761 tonnes of consumer demand for the yellow metal in 2023.

“Based on year-to-date import figures, demand could rise by ~10% this year, taking demand above 800 tonnes for the first time since 2015,” they said. “Despite tensions in the Middle East boiling over in the last week, the gold price was little changed and continued to consolidate at around $2,650/oz.”

Turning to silver, Heraeus said that while the Perth Mint saw sales of the gray metal rise sharply last month compared to August, silver coin demand is still well off last year’s strong pace.

“Coin and bar sales improved by 49% month-on-month to 963 koz in September, driven by new product releases and a strong silver price performance,” they said. “The silver price in Australian dollar terms (+7.46%) outperformed the US dollar price (+5.27%) last month, which helped domestic sentiment, though it should be noted that a large portion of the Perth Mint’s sales comes from overseas.”

“However, year-to-date Perth’s sales are down more than 40% year-on-year, as sales have been on a downward trend, bottoming in June this year,” they noted. “Likewise, sales of silver coins from the Canadian Mint are 52% lower year-to-date, based on the latest data.”

The analysts pointed out that silver reached another cycle high on Friday, but once again failed to break the $33 per ounce level. “By Friday, after four days of incremental gains, the silver price closed 2.55% higher at $32.48/oz,” they wrote. “Once silver does close above resistance at $32.94/oz, a further rapid movement higher may be possible.”