Fears of new import tariffs boost demand for gold in India

Out of fear of new import tariffs, Indians continue to buy a lot of gold, writes Reuters. Traders in India are already building up a supply of gold for the wedding season, as they fear that the government will take new measures to discourage the import of gold. "Speculation about new tariffs is causing panic buying and as a result, imports will exceed 100 tonnes again this month", an Indian gold trader from Mumbai told Reuters.

Last year, gold imports into India came to a virtual standstill due to the introduction of an import quota, which made it almost impossible to get enough gold into the country. In October, India imported 150 tonnes of gold, while in the same month last year it was only 25 tonnes. In September, gold imports were already substantial at 143 tonnes.

Gold imports on the rise again in India

India is the second largest buyer of gold in the world after China. For years, India was the largest user of the precious metal, but due to the Indian government's anti-gold policy, official imports have been significantly lower than normal over the past two years. This decline was accompanied by an explosive increase in gold smuggling. This year, the new Indian government briefly eased import restrictions on gold, with the result that imports of the precious metal have risen sharply again.

The Indian government and central bank are struggling to control the value of the currency. Due to high inflation, Indians don't want to park a lot of money in savings accounts. Instead, they exchange rupees for gold jewelry, coins, and Gold bars. India's Business Standard writes that savers have been withdrawing relatively more money from bank accounts lately.

Little interest in the savings account

According to bankers in India, people don't just take money out of the bank for the festivals. According to them, there is structurally little interest in savings accounts. "Consumers are using their money to buy shares and buy gold. Companies that have money left over would rather invest it in corporate bonds than park it in a bank account.", a banker from the State Bank of India told Business Standard.

Indians are again importing more than 100 tonnes of gold in November, according to estimates