Indian jewelers are holding back gold purchases ahead of their busiest demand season, betting that a recent drop in prices has further to run, according to the country’s biggest precious metals refiner. Large jewelry chains that typically account for the bulk of sales have yet to fully return to the market, said Samit Guha, chief executive officer and managing director of MMTC-PAMP India Pvt., a joint venture of state-owned MMTC Ltd. and Swiss refinery PAMP SA. Buying has instead been led by small- and mid-sized jewelers, some of which have placed repeat orders, he said. Gold fell below $4,000 an ounce last week for the first time since July, extending its decline to about 24% since the US-Iran war began in late February. Prices had surged past $5,400 to a record in January.Bigger jewelry makers typically step up purchases when prices start rising to lock in supplies before they become more expensive, while drawing down inventories when they expect further declines, Guha said.Demand in the world’s second-biggest gold consumer has remained subdued this year after the government more than doubled the import duty to 15% in May. Prime Minister Narendra Modi has also repeatedly urged Indians to curb purchases to contain a widening trade deficit. The South Asian nation imports nearly all the gold it consumes. The higher tariff has also pushed more buying into under-the-counter cash markets.“The increase in duty has impacted purchases for us,” Guha said.The caution contrasts with China, the world’s biggest gold consumer, where household demand has picked up recently as prices declined. India’s reluctance to buy adds to signs of weakness just as demand enters its strongest period, with purchases typically concentrated between October and December around Diwali, which falls on November 8 this year.Tighter import rules and weaker rural demand following El Niño-driven monsoon disruptions are expected to curb India’s gold imports, according to Citi Research. Shipments may total about 106 tons from October through December, roughly half the historical fourth-quarter average of 212 tons, it said.MMTC-PAMP’s gold sales are running below last year’s levels, with demand skewed toward smaller coins and bars, Guha said. September sales were roughly flat from a year earlier, while buying has picked up a little in October.“If gold rebounds, we will see buying,” he said.
