 | « Back to article | Print this article |
Gold to stay costlier in India
Gold is set to remain costlier in India than abroad due to the government's frequent actions to curb its import, to control the burgeoning current account deficit (CAD). Sustained depreciation in the rupee against the dollar is also set to keep the price up here.
Despite a marginal 0.25 per cent decline in London, the price of gold in India shot up 2.3 per cent in the past week for both reasons; import duty was raised by another two percentage points.
Standard gold at Zaveri Bazaar here had closed at Rs 27,530 per 10g yesterday, a rise of Rs 630 over the past week.
In contrast, the yellow metal fell marginally by $4.87 over the week to $1,383.05 an oz on Friday.
During the week, the price was volatile, both here and abroad.
During the past 18 months, import duty on gold has been raised eight times, from the ad valorem level of Rs 300 per 10g in January 2012.
Click on NEXT for more...
Gold to stay costlier in India
Global prices
"Gold is set to remain costlier in India than the rest of the world," said Bachhraj Bamalwa, chairman, All India Gems & Jewellery Trade Federation. Spot gold fell nearly one per cent or Rs 265 for 10g yesterday as traders abstained from fresh orders, amid expectation of a further fall in prices globally.
Although, gold's risk aversion appetite has gradually waned, retail demand remains.
Click on NEXT for more...
Gold to stay costlier in India
Investor sentiment
When gold prices were hovering around Rs 32,500 per 10g, buying sentiment was robust in India on renewed interest from retail consumers, who stepped up their investment.
Now, the price is around 15 per cent lower from the peak level. So, the investors' sentiment continues, as they observe the current price level attractive, said Bamalwa.
Silver fell by 2.7 per cent in global markets to close the week at $21.67 an oz. It fell 1.1 per cent in India to Rs 44,200 a kg at Zaveri Bazaar, a decline of Rs 475 a kg during the week.
It is likely to flow the gold trend in the coming weeks, said an analyst.
Ashok Minawala, an industry veteran and past chairman of AIGJF, believes domestic jewellery manufacturers and retailers would comfortably be able to pass on the amount of duty increase to consumers.
Click on NEXT for more...
Gold to stay costlier in India
Lower grammage
Those wishing to buy gold jewellery would get lower grammage due to the impact of the higher import duty but their buying sentiment would not be impacted.
While the rise in import duty would not affect consumer demand, it is likely to boost gold smuggling. Gold import rose 150 per cent in May.
