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.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.
Image CAPTCHA
Copy the characters (respecting upper/lower case) from the image.

EDITORIAL OF THE DAY

  • Time and tide are ripe for megaplans such as Sagarmala

    To say that India’s infrastructure is in urgent need of upgrade would be to state the obvious.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Taslima Nasreen

No place for the poor anywhere

As we sit in the comfort of our homes reading ...

Purnendu Ghosh

Are you worth remembering?

One of the best inscriptions I have come across in ...

Dharmendra Khandal

Tiger in urban landscape

Ranthambhore is in a no-win situation. Just a few days ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture