Domestic gold price continued to react after a fall of Rs. 780 on Thursday following Reserve Bank of India’s (RBI) announcement easing gold imports and allowing more institutions to import it.
On Friday, spot gold reacted by Rs. 100 to close at Rs. 27,590 per 10 grams on the Mumbai Bullion market. On Thursday it fell Rs. 780 to close at Rs. 27,690.
The relaxation in gold import norms was long awaited after the country’s Current Account Deficit (CAD) reduced substantially and the measures are expected to help organized jewellers, reduce prices and up demand.
“The relaxation of norms are happening in the backdrop of a strengthening rupee against the US dollar and steady international price of gold,’’ C.P. Krishnan, Wholetime Director, Geojit Comtrade, a commodity trading outfit, told this correspondent.
“The spot premium on gold is coming down fast as people want to dispose of accumulated gold,’’ he said adding that it seemed likely that the new government would reduce the 10 per cent import duty on gold in stages. “Smuggling will come down when the duty issue is tackled.’’
Vipul Shah, Chairman, Gem & Jewellery Export Promotion Council (GJEPC) told The Hindu that the RBI move was welcome and would help smaller jewellers. “I expect a 15-20 tonne per month increase in demand as a result of this. The move has already resulted in the official gold premium coming down from $120 per ounce levels a fortnight ago to $70 levels and can further fall and settle at $20-10 levels in future.’’
“What the government has done is merely increase the number of distributors of gold,’’ Ashok Minawala, past president and director, All India Gem & Jewellery Traders’ Federation (AIGJF) said. “The euphoria has more to do with excitement and relief on the part of the industry that their pleas have been heard and the hope that 80:20 will be scrapped.’’
Mohit Kamboj, President, Indian Bullion and Jewellers Association (IBJA) expected gold prices “to touch Rs. 23,000-24,000 per 10 gram levels before Diwali with spot premium on gold vanishing and the government reducing import duty”.