Amid festive season in India, Gold imports in India surged by 40% in August 2023

Gold imports in India, the world's second largest consumer of the precious metal, surged by 40% in August 2023 due to festival buying.

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This might exacerbate India's trade deficit, which is already at risk due to rising crude oil costs.

According to preliminary figures for India's gold imports in August 2023, a person familiar with the proceedings said on the condition of anonymity that India's gold imports increased to $4.9 billion, up from $3.5 billion in August 2022.

Trade Deficit in India might reach $21 billion

The Indian government plans to provide overall trade deficit figures on September 15, 2023, which falls on Friday this week. The trade deficit in India is estimated to reach $21 billion, according to a Bloomberg survey of experts.

A commerce ministry official said August trade data is still being compiled and that commenting on the figures would be premature, while a Finance Ministry spokesperson could not be reached on the phone for comment.

Gold purchases typically increase in the second half of the year as a result of holidays, such as Diwali in October or November, weddings, and as an auspicious investment. A predicted increase in sales during the holiday season should help offset a dip in consumption this year caused by higher local prices and a slowdown in discretionary spending.

The value of gold imports increased during August, owing in part to a 12% increase in offshore market prices over the previous year and a lower base in 2022, when imports fell 30%.

India's primarily imports gold from Switzerland

Overall demand in the South Asian nation is expected to fall to 650 tonnes to 750 tonnes this year, the lowest since the coronavirus pandemic rocked the country in 2020, according to the World Gold Council in August. India imports almost all of its gold, primarily from Switzerland.

The Commerce Ministry also gathers gold trade data, that may differ from the figures provided by the Finance Ministry.

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