Gold imports by India, the world's largest consumer, are expected to be muted until the end of July due to firm global prices and a lull in demand after the wedding season and arrival of the monsoon, traders said on Monday.
Gold imports had tumbled so far this month as the wedding season, which runs from January to mid-May, had ended and farmers were busy sowing as the annual monsoon had arrived in the south and northeast India, they said.
"Business is dull as the focus has shifted to the monsoon rains and agricultural activities," said Nayan Pansare, a senior official at trading firm Inter Gold Ltd.
Traders said demand would pick up from August when the festival season starts in the middle of the month and peaks in October with Diwali, the festival of lights.
India imports nearly 70 per cent of the 800 tonnes of gold it consumes each year.
Imports into Chennai had plummeted more than 70 per cent from a month ago to 50 kg per day, traders said.
Imports into Mumbai had slipped to 150 kg to 200 kg per day from more than 600 kg a month ago as people were not comfortable with current prices, said Prithvi Raj Kothari, a bullion dealer.
World gold prices were quoted at around $362 an ounce on Monday, up from about $348 a month earlier.
Demand for gold jewellery, which accounts for nearly 85 per cent of domestic sales, rises during the wedding season when parents and relatives shower brides with gifts.
Traders said the farming community, which accounts for 65 per cent to 70 per cent of the country's gold consumption, had been investing in farm products such as seeds and fertilisers instead of purchasing luxury items such as gold jewellery.
Some farmers were even selling old stock to buy farm inputs, they said.
"We are in the middle of a dull season," said Chennai-based Ranjit Rathod, director of the bullion trading Daman Prakash group.
Rathod said imports might momentarily rise in the coming weeks if global prices fall below $350 an ounce as jewellers would use the opportunity to replenish their stocks.
