Gold imports decline following duty hike

Tags: Commodities
India’s gold imports slowed to a trickle this week after the government raised import tariffs at the same time that global prices strengthened, and these higher prices also deterred purchases from elsewhere in Asia, traders said on Wednesday.

Asian buyers rushed to the market in early January to take advantage of gold prices that were below $1,630 per troy ounce, their lowest in more than four months.

Prices, however, have since risen to almost $1,700 per troy ounce, discouraging buyers who usually stock up on gold ahead of the lunar New Year holidays in mid-February.

Most Indian buyers stocked up on gold in the first week of January, after the finance minister hinted that a duty hike is on the cards.

Last week, India raised import taxes on gold to 6 per cent from 4 per cent in a bid to curb imports to help rein in a record current account deficit, but industry experts said long-term gold demand is unlikely to waiver.

“We had comfortable sales in the past two months, but after the duty hike no one is interested,” said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in Kolkata.

Over the longer term, unofficial channels will replace official import channels as gold is required from birth till death in Indian tradition, he added. India is the world’s biggest gold importer.

The benchmark gold futures contract on the Multi Commodity Exchange (MCX) traded at Rs 30,792 per 10 gm, up from a one-month low of Rs 30,758 hit last week.

Higher prices also slowed down China’s gold buying two-and-a-half weeks before the Lunar New Year holiday during which gifts of gold jewellery, bars and coins are popular. Some traders said buyers had already stocked up enough in January.

“I wouldn’t say demand from China is really good in comparison to the same time in the last few years,” said a Hong Kong-based trader.

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