Flashing the bling... Gold imports into India staged a smart recovery in August ahead of a likely strong buying binge from October. But sky-high prices could still prove an impediment. Image Credit: Gulf News Archive

Mumbai: India's gold imports more than doubled last month ahead of the start of key festivals in the world's second-biggest bullion consumer. Inbound shipments climbed to 35.5 tonnes in August from 14.8 tonnes a year earlier.

Imports were also higher than July's 25.5 tonnes. The rebound in demand follows a nearly 80 per cent drop in imports between January and June and comes as India slowly eases restrictions on movement and economic activity put in place to control the coronavirus outbreak.

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The country is about to enter its key season for weddings and festivals, peaking with Diwali in November, which usually sees gold demand rise as buying and gifting the precious metal is considered auspicious.

Still, expectations for a substantial recovery are muted as prices remain near record levels and India is headed for its first annual economic contraction in more than four decades. "The liquidity is going to be tight in the market and prices are also high, so buyers will cut down" on how much they buy, said Harish Galipelli, head of commodity and currencies at Inditrade Derivatives & Commodities. "I don't see any major upswings in imports going forward."

While demand has improved to about 20 per cent of normal business from 15 per cent previously, it's currently an inauspicious period to buy gold, according to N. Anantha Padmanaban, chairman of the All India Gem & Jewellery Domestic Council. Purchases may not pick up until about mid-October, during the festival of Navratri, he said.