Gold has always been attractive in India, but October 2024 completely changed its story. Amidst the inflation, the common man stayed away from buying gold, jewelery showrooms also yearned for the crowd, but despite this the country’s gold import increased by 200 percent.

According to statistics, in just one month India bought gold worth $14.7 billion, which is the largest import of any month in the history of the country. This record import directly pushed the trade deficit to $42 billion.

Experts say that if gold had not been purchased in such quantities, the trade deficit could have been controlled by coming down to $27 billion, but the demand for gold increased as if an invisible hand had changed the course of the market.

The first suspicion was on the Reserve Bank, because RBI often buys gold during the period of dollar decline. But this time RBI bought only 4 tonnes of gold in nine months of the year, which is less than last year. RBI’s share in total gold imports was less than five percent, hence RBI did not make such huge purchases.

After this the eyes turned to ETF i.e. Gold Exchange Traded Funds. There was a record investment of Rs 7000 crore in ETFs in India this year, which was the second largest inflow in Asia, although gold ETFs account for only 10 percent of the entire annual gold market. Therefore, ETF investment also cannot be considered the reason for such huge imports.

Government reports indicate that this time the demand for gold was raised by big institutional buyers. Many bullion traders have increased strategic reserves despite the rise in prices. There has been a shift in the global supply chain – gold flows are being reorganized to Russia, Africa and the Middle East, with new sourcing channels opening up to India via Switzerland and the UAE.

Due to this, sensing the opportunity, India stocked a huge amount of physical gold. The demand for jewelery sector is stable at present, but the appetite for ‘physical gold’ has suddenly increased in the bullion market. Traders say that prices were expected to rise further, so many big groups bought gold for future security.