INDIA’S gold imports in May jumped 677 per cent from a year ago to the highest level in a year as a correction in prices just before a key festival and the wedding season boosted retail jewellery purchases, a government source said on Monday.

Higher imports by the world’s second-biggest bullion consumer could support benchmark gold prices, but the surge could increase India’s trade deficit and put pressure on the ailing rupee.

India imported 101 tonnes of gold in May, compared to 13 tonnes a year earlier, the source said on Monday on condition of anonymity, as he is not authorised to speak to media.

In value terms, May imports surged to US$5.83 billion from US$678 million a year ago, he said.

“Retail consumers were waiting for price correction. As prices corrected during the Akshaya Tritiya festival, they rushed to jewellery shops,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.

Buying gold is considered auspicious during the annual Hindu and Jain festival, celebrated in the first week of May.

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Local gold futures fell to 49,572 rupees per 10 grams in May, the lowest in nearly three months.

Demand for gold improved last month also because the wedding season has arrived; weddings were postponed to this year from the last year because of the restrictions imposed to curb the spread of Covid-19 infections, said a Mumbai-based dealer with a private bullion importing bank.

Gold is an essential part of the bride’s dowry in India, and also a popular gift from family and guests at weddings.

India’s gold imports in June could fall below 60 tonnes, as demand has started to falter due to the recent rebound in prices, the dealer said.