Consumers are likely to end up paying more for gold as fresh restrictions on imports of the yellow metal imposed by the Reserve Bank of India (RBI) will reduce supply in the market. Traders expect the stock to fall short as demand rises in the festive season, which starts in the run-up to Dussehra and Dhanteras leading to Diwali in November. Subsequently, the marriage season sets in and the demand for gold jewellery increases .
Kumar Jain, vice-president, Mumbai Jewellers Association, told Mail Today that the price of gold rose by Rs 1,000 per 10 grammes as soon as RBI announced the new curbs on gold imports by ragging them to exports.
"The premium on gold will go up further as the 20 lakh small jewellers in the country who operate with small stock will find it difficult to get fresh supplies to meet demand," he explained. Gold prices touched their highest level in more than a month at Rs 28,365 per 10 gm on Tuesday. Gold futures prices on Wednesday rose by Rs 81, or 0.29 per cent, to Rs 27,655 per 10 gm for delivery in August as speculators enlarged positions largely in tan-dem with a firming trend over-seas as spot demand rose.
India imported 536 tonnes of gold in the first six months of this year alone compared to 860 tonnes in 2012. Going by this trend, the total imports for the year would have exceeded 1,000 tonnes if the government and RBI had not intervened
, a senior finance ministry official said.
More than 330 tonnes of gold was imported in the April-June quarter as traders stocked up the yellow metal to cash in on the fall in prices in the international market. They had also anticipated fresh measures by the government to reduce imports to curtail the record trade deficit. RBI on Monday moved to further tighten gold imports making them dependent on export volumes with an eye to reducing a record
current account deficit.
According to Morgan Stanley estimates, the new policy may restrict overall gold imports to about 200 tonnes a year. Even if exports rise 50 per cent, total shipments to India would be lim-ited to around 300 tonnes.
"There will be difficulty (in supplies) when demand rises after August 15," said Haresh Acharya, head of the bullion desk, Ahmedabad-based Parker Bullion.
Courtesy: Mail Today