MUMBAI, Sept 5 (Reuters) - India’s gold imports more than doubled in August to hit their highest level in 15 months as lower prices prompted manufacturers to replenish inventory for a jewellery exhibition, provisional data from metals consultancy GFMS showed.
The 116.5 percent jump in gold purchases year-on-year to 100 tonnes last month by the world’s second biggest consumer could support global prices, which have so far slid 8.5 percent in 2018.
But rising gold imports could widen India’s trade deficit and further pressure its currency, the rupee, which hit a record low of 71.95 against the dollar on Wednesday.
In August, local gold prices fell to their lowest level in seven months, prompting jewellers to buy the bullion to fulfil jewellery show orders, said Cameron Alexander, a Perth, Australia-based analyst at GFMS.
Jewellers showcased designs to buyers last month at a five-day India International Jewellery Show in Mumbai.
“Investment demand improved in August as some buyers were betting rupee will fall past 70 rupees against the dollar,” said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in Chennai.
For the first eight months of 2018, Indian gold imports fell 12.6 percent from a year earlier to 532.1 tonnes, data compiled by GFMS showed.
Indian gold demand is set to improve in the second half of the year after falling 6 percent in the January-June period, as government steps to boost farmers’ incomes are expected to boost rural buying power, the World Gold Council said last month.
In September, imports would likely moderate as gold prices have rebounded in last few days due to the depreciating rupee, said a Mumbai-based bullion dealer with a private bank.
“From October, imports would again revive due to the festivals,” the dealer said.
Demand for gold usually strengthens in the final quarter of the year as India gears up for the wedding season as well as major festivals including Diwali and Dussehra, when buying the yellow metal is considered auspicious.
Reporting by Rajendra Jadhav; Editing by Sai Sachin Ravikumar