India''s May gold imports jump, more curbs possible

NEW DELHI, June 3 (Reuters) - India imported around 162tonnes of gold in May, a finance ministry spokesman said onMonday, much more than expected and making further measures fromthe government to curb demand in the world''s biggest bullionbuyer almost certain. The figure is sharply higher than April, even though it isbelow an estimate of 262 tonnes earlier in the day from FinanceMinister P. Chidambaram which had stunned experts, including theWorld Gold Council and the Bombay Bullion Association. "The correct figure for May gold import is around 162tonnes, and not 262 tonnes," D.S. Malik, spokesman of theministry of finance, told Reuters. Indians have continued a buying spree that started in April,as consumers took advantage of a slide in global prices whichcoincided with regional festivals when gold is bought for gifts. April''s imports were 142.5 tonnes, according to an officialin the customs department at the ministry of finance, whohandles gold data. In value terms, April imports shot up 138percent from a year earlier to $7.5 billion, including smallamounts of silver.

CURBS NEEDED? With May imports soaring even higher, the government isunder pressure to look at more measures to rein them in. Suchhefty imports threaten to widen a current account gap whichalready hit a record 6.7 percent of GDP in the December quarter. "Necessarily, we will have to check (gold imports),"Chidambaram said, after quoting the incorrect import figure. India hiked gold import duty by half to 6 percent in Januaryand the central bank has also stepped in to restrict purchases.The measures helped reduce first quarter imports to 215 tonnesfrom 228 tonnes a year earlier, according to figures from theWorld Gold Council. But since then, domestic prices have dropped sharply,tracking global trends, and undermined further by a strongerrupee. Gold futures on Mumbai''s Multi Commodity Exchange hit ayear low of 25,720 rupees per 10 grams on April 16. They were trading around 27,110 rupees on Monday - roughlyequivalent to $1,351 per ounce - as global spot gold prices were quoted around $1,403 per ounce. The government is cautious about raising import duty furtherbecause it is concerned that this could encourage smuggling. A finance ministry official said on Monday the Reserve Bankof India could consider banning all purchases by jewellers on adeposit basis with full payment on delivery. On May 13, thecentral bank banned such purchases from banks. The WGC forecasts imports of about 615 tonnes in the firsthalf of 2013 - implying June imports would have to retreat tomore normal levels of about 80 tonnes. It expects second halfdemand to match 2012''s 485 tonnes - putting it on track for arecord year. But some in the industry remain sceptical that Indianconsumers will have bought so much in May. "After Akshaya Tritiya (festival on May 13), demand was notthere. Across India consumers were not into the market as therewas a lot of volatility," said Haresh Soni, chairman of AllIndia Gems and Jewellery Trade Federation. "From the market point of view, we are not expecting Mayfigures should be more than April," he added.($1 = 56.4850Indian rupees)