InvestorQ : Is it a good sign that gold imports have again picked up in July 2020?
Mary Joseph made post

Is it a good sign that gold imports have again picked up in July 2020?

Answer
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sara Kunju answered.
2 months ago


There are two ways to look at the sudden spurt in gold imports in July but first the numbers. For the month of July 2020, gold imports bounced back to 25.50 tons. This represents a 20% jump on a YOY basis while it is a huge doubling of gold import demand on a MOM basis, i.e. if you compare with June 2020. Clearly the consumption pressure is abating and that is positive at a macroeconomic level.

Gold imports in the first half of 2020 i.e. H1-2020 was down by 80% on a comparable basis and so gold demand recovery still has a very long way to go. While the rise in demand is a good sign that people are willing to consume, it means that more of the forex reserves are being now used to fund gold imports, a non-productive investment. That is not a very positive news for the RBI.