India's trade deficit may surge on rising gold imports, festive buying

livemint.com:

gold imports in the second biggest consumer of the precious metal has risen to the tune of 40 per cent in August 2023. This may blow out India's trade deficit, which is already at threatening levels on soaring crude oil prices. As per the provisional numbers of India's gold imports in India in August 2023, a person familiary with the developments said on the condition of annynimity that India's gold imports grew to $4.9 billion, which stood at $3.5 billion in August 2022.

Indian goverment is set to announce overall trade deficit data on September 15, 2023 i.e. on Friday this week. According to Bloomberg survey of economists, India's trade deficit is expected at $21 billion .

A trade ministry spokesperson said August trade data is still being compiled and it would be premature to comment on the figures, while a Finance Ministry spokesperson couldn’t be reached on the mobile for comment. Gold purchases usually pick up in the second half of the year during festivals, which culminate with Diwali in October or November, weddings and as an auspicious investment. An expected rise in purchases during the festive months could help pare a drop in this year’s consumption, hit by elevated local prices and a slowdown in discretionary spending.

The value of gold imports also jumped during August partly because of a rise of 12% in overseas spot prices in the past year and a lower base in 2022 when imports slumped 30%. Overall, demand in the South Asian nation is forecast to drop this year to 650 tons to 750 tons, the lowest since the coronavirus pandemic hit the country in 2020, the World Gold Council said in August. India imports almost all the gold it uses mainly from Switzerland.