"Robust: World's 2nd Largest Gold Market Sees 42-Month High Import in August"

Precious metals analysts at Heraeus have indicated that India's gold imports have surged to their highest levels since early 2021, while silver coin sales by major mints this year are significantly lower than the pace set in 2023, despite the strong performance of silver prices.

In their latest precious metals update, the analysts stated that India's gold imports have reached a three-and-a-half-year high, preparing for robust seasonal demand.

They wrote: "Driven by strong consumer demand and industry restocking during Diwali and the remaining festivals of the fourth quarter, India's gold imports in August soared to 125 tons, marking a new high not seen in over three years." "This represents a year-on-year increase of 58% and a month-on-month increase of 212%. The reduction in import duties for precious metals in July supported imports."

Advertisement

They added: "Consumers who postponed purchases of jewelry and gold bars due to the rise in gold prices in the first half of 2024 may view the reduced tariffs as an opportunity to spend." "In August, the average local gold price in India was discounted by $8.2 per ounce, and although the market seemed more normalized after a significant shift from discounts to premiums in late July, demand remained stable and above levels before the tariff cut (source: World Gold Council). Any adjustment in gold prices could lead to retailers restocking, which would keep imports high."

The analysts noted that India remains the second-largest gold consumer market, with the Indian subcontinent's gold consumption demand at 761 tons in 2023.

They said: "Based on import data so far this year, demand could grow by about 10% this year, bringing demand to over 800 tons for the first time since 2015." "Despite heightened tensions in the Middle East last week, gold prices have hardly changed, continuing to consolidate around $2,650 per ounce."

Gold prices experienced some volatility at the start of the week, with the price of gold falling to a low of $2,640 per ounce around 2 a.m. Eastern Time, then reaching a triple top just below $2,660 shortly after 8 a.m., before falling to a new low of $2,637.77 per ounce an hour later. Spot gold last traded at $2,641.88 per ounce, down 0.45% for the session.

Regarding silver, the analysts said that while the Perth Mint's sales of the gray metal last month rose significantly compared to August, silver coin demand is still far below last year's strong pace.

They said: "Coin and bar sales increased by 49% month-on-month in September, reaching 963 thousand ounces, driven by new product launches and strong silver price performance." "Last month, the silver price in Australian dollars (+7.46%) outperformed the dollar price (+5.27%), which helped boost domestic sentiment, although it should be noted that most of the Perth Mint's sales come from overseas."

They noted: "However, year-to-date, Perth's sales are down more than 40% compared to last year, as sales have been trending downward, bottoming out in June this year." "Similarly, according to the latest data, the Royal Canadian Mint's silver coin sales have fallen by 52% so far this year."Analysts have noted that on Friday, the price of silver reached another cyclical high but once again failed to break through the level of $33 per ounce. They wrote: "By Friday, after four days of incremental increases, the price of silver closed at $32.48 per ounce, up 2.55%." "Once silver closes above the resistance level of $32.94 per ounce, it may experience a further rapid increase."

On Monday morning, the price of silver also experienced some fluctuations. Spot silver fell from $32 per ounce at 7:45 AM Eastern Daylight Time to a session low of $31.412 per ounce at 9 AM. Currently, spot silver last traded at $31.865 per ounce, down 1.05% on the daily chart.