The news agency cited industry officials and government sources who pointed to soaring gold prices as the key factor behind the slump.

Sharp Decline in Gold Imports

Gold imports are expected to total just 15 metric tons this February, a steep fall from 103 tons in the same month last year. On average, India has imported 76.5 tons of gold in February over the past decade. This dramatic drop could help narrow the country’s trade deficit and stabilize the rupee, which remains near record lows against the dollar.

Price Surge Hits Demand

Spot gold prices recently hit an all-time high of $2,956.15 per troy ounce, while domestic gold prices in India surged to a record 86,592 rupees per 10 grams. The spike in prices has significantly reduced buying interest, with banks and jewellers slowing their imports.

“Barring a major price correction in the next few days, we don’t expect any significant improvement in imports this month,” said a government official who requested anonymity.

Bullion Market Struggles

A Mumbai-based bullion bank executive noted that January’s gold stock remains unsold, further discouraging fresh imports. “The price surge killed demand, and we were stuck with the gold we brought in January. There’s no point in importing more in February,” he explained.

Gold Rerouted to the U.S.

Some banks have even reallocated their gold reserves to international markets. “With the U.S. market offering nearly a 1% premium, it made no sense to sell in India, where gold is trading at a $35 per ounce discount,” said a Mumbai-based bullion dealer.

Unusual Slowdown During Wedding Season

The sharp import decline comes despite India’s ongoing wedding season, traditionally a period of high gold demand. Weddings are a major driver of gold purchases in India, where jewellery plays a crucial role in bridal attire and gifting customs.

While gold demand remains under pressure, industry experts believe any significant price correction could reignite buying interest in the coming months.