There hasn’t been a lot of good news about gold demand of late. But one critical consuming nation is now bucking the downtrend–according to insider reports this week.
The place is India. Where government officials said that bullion imports are surging.
Bloomberg quoted unnamed officials as saying that India’s gold imports stand at 940 tonnes for the 10 months from April 2014 to January 2015.
That’s a significant rise. Considering that imports for the entire fiscal year previous (April 2013 to March 2014) amounted to just 662 tonnes.
All told, the sources said they expect India’s gold shipments to come in around 1,000 tonnes for the fiscal year ending March 31. Which would represent a rise of over 50% from last year’s levels.
As I’ve discussed before, the big driver behind the jump has been relaxation of import rules around gold. With India’s government allowing a broader range of firms to bring in bullion during 2014. And dropping rules that had previously required these importers to re-export some of their supply.
The numbers show these measures are having a notable effect. And recent events suggest this trend in motion could well continue.
That’s because the biggest driver behind the gold import curbs was India’s rising current account deficit. With government officials trying to reduce the trade gap by forcing consumers to spend less on foreign gold.
But the big drop in oil prices recently has done more in curing the current account deficit than gold curbs ever could. Meaning that the pressure is now off India’s government to keep out bullion shipments.
That could signal a wholesale return of this major consumer to the gold market. Watch for more data on imports here to confirm the pattern–and for knock-on effects on the gold price if this does indeed materialize.