Demand for gold has suffered a blow after prices shot up to multi-year highs due to macro-economic factors and investor demand. Gold imports dropped 73 per cent in August, while monthly purchases by central banks fell to multi-year low levels in July.

Gold imports last month dropped 73 per cent to 30 tonnes from 111.47 tonnes in the year-ago month, the lowest level in three years, said a Reuters report quoting government officials. The 30 tonnes include import for domestic consumption and export purposes. In value terms, August's imports fell 62 per cent to $1.37 billion, the lowest since August 2016.
A rally in the international gold market saw Indian prices touching record high levels several times in the past few months. A hike in import duties also discouraged retail buying.

“It is a lean season and the marriage season has not started yet. High gold prices is another reason to keep away from buying gold,” said Debajit Saha, Senior Analyst, Precious Metals Demand, South Asia and UAE, GFMS.

According to him, gold is available for a discount in the bullion market ever since prices began moving up in June. The discounts reached $59 per ounce last week across key bullion markets and has now come down to $40- $45 per ounce.

“Discounts might further come down by third week of September when jewellery manufacturers and jewellers begin their purchases for the festive season,’ he said.