India’s clampdown on black money to boost transparency in the financial system continued to cut demand for gold in the world’s second-largest consumer, with imports extending a decline last month.

Overseas purchases fell 28 per cent to 58.6 metric tonnes in January from a year earlier, according to a person familiar with provisional data from the finance ministry, who asked not to be identified as the data aren’t public. Imports dropped 41 per cent to 499.1 tonnes in the first 10 months of the financial year. Ministry spokesman D. S. Malik didn’t respond to calls seeking comment. 

Consumption in the South Asian nation is expected to remain weak after demand fell to the lowest in seven years in 2016 because of higher prices, a jewellers’ strike and the government ban on higher denomination currency notes in November to curb corruption. Local purchases are forecast between 650 tonnes to 750 tonnes this year, according to the World Gold Council.

"Demand continues to be slow in the local markets even though liquidity is improving,” Ketan Shroff, joint secretary at the India Bullion & Jewellers Association, said by phone from Mumbai. "Buyers are exchanging their old jewelry for new and supply remains good.”

Purchases may see some traction from next month as people start buying for the wedding season in March-April, but a further drop in prices is needed for any major recovery, he said. Indians buy gold during festivals and for marriages as part of the bridal trousseau or as gifts, and the nation imports almost all the gold it consumes.

Source :Times Of Oman