The gold import in the September quarter has doubled despite the challeneges faced by the industry due to GST roll out, PMLA notification and dull demand season.
“September quarter official gold import was 132.7 tonnes against 79.8 tonnes, representing 66 per cent rise," according to the GFMS Thomson Reuters Q3 (quarter ending September 2017) Gold survey.
However, the data also consists of official bullion imports.
In July-August period, India is estimated to have imported 33 tonnes of gold from South Korea under Free Trade Agreement that was signed in 2009. If this import is considered, total official Q3 import comes to 165.7 tonnes, which is more than double of last September quarter import.
Even unofficial import or smuggling was quite high in September quarter. GFMS survey says that in Q3 2017, 46 tonnes gold was imported unofficially compared to 25.2 tonnes in Q3 2016.
Jewellers were selling imported gold to customers but they were showing it as sale against exchange of old jewellery, explains report.
They used to bill customers for making charges and GST.
Import increased at a time when there was a dip in demand for gold post GST and the government issuing notification bringing jewellery trade under Prevention of Anti Money Laundering Act.
Under the act, the customers had to submit their identity proof to jewellers and jewellers were supposed to show all trades above Rs 2 lakh as additional reporting.
During September quarter India’s gold demand, according to survey was 141 tonnes (17 per cent higher), while investment demand was 10 per cent higher at 24.3 tonnes, taking total gold demand to over 165 tonnes.
Global gold demand of jewellery and investment was 685.6 tons which is 7.3 per cent higher than 639.4 tons in September quarter 2016.
Gold price traded above $1300 which kept demand under check.
Survey says in September quarter “lacklustre level of demand is still some 22% lower than two years earlier and key to the burgeoning surplus.”
Survey is bullish for gold price next year.
It said that gold prices correcting from above $1300 level is a “healthy correction for the price that had become overextended and think it has formed a base for a more sustainable move above $1,300 later this year and to rise still further in 2018 as it averages $1,360 and hits a 2018 peak of almost $1,450. Crucial to this is the growing risk inherent in key global equity markets, with the S&P 500, DAX and FTSE all recording all time highs in recent weeks”.
The report highlights that the growing risk will spur some investors to make (or increase) their allocation in gold rather than being caught too heavily in an equity fuelled basket. This is likely to be supported by continued geopolitical tensions.