The world's second biggest bullion consuming nation India's gold imports advanced significantly by 176% year-over-year during August, said HSBC, citing government's trade data.

India's merchandise trade deficit widened to $10.8 billion in August from $10.7 billion last August as gold imports rose to $2.03 billion from $740 million for the same months, respectively.

Tight import restrictions imposed last year by the Reserve Bank of India hampered gold trade. The RBI relaxed some of those import restrictions to allow several private agencies to import metal.

However, the bulk of the restrictions have been kept in place despite optimism from jewelers and industry groups in India earlier this year over (Prime Minister) Narendra Modi's victory in the general elections, which was interpreted as friendly for the gold market. HSBC expects India's appetite for bullion likely to improve ahead of the gold buying holiday, Diwali, on 23 October.

According to Commerzbank, the reported trade deficit is in line with the government's plans – though this also means that the gold import restrictions will probably not be eased for the time being.

Commerzbank concurs with HSBC that "gold imports are likely to pick up even further ahead of the important religious festivals of Dhanteras and Diwali."

Source:- metal.com