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India gold at $8/oz discount, demand dn on high rate, duty cut hope

Thursday, Jan 10

 

By Roshni Devi

 

MUMBAI – Price of gold in India was at a discount of $8 per ounce to the duty-paid landed price of imported gold as domestic demand has dried up with prices at a five-year high, traders and jewellers said.

 

Until December, gold prices in India were at $2-$3 discount to the import parity price.

 

Today, gold hovered around $1,300 an ounce in the US, while in Mumbai it was over 32,000 rupees per 10 gm, the level last seen in September 2013.

 

"Gold prices are very high for customers with rates above 33,000 rupees now (including taxes), so demand has dried up. Also, it's an inauspicious period for purchases till mid-January," said Ajit Pendurkar, of Mumbai-based M.V. Pendurkar & Co Jewellers.

 

Customers have also delayed their purchases on expectations of a cut in import duty in the upcoming interim budget for 2019-20 (Apr-Mar) likely to be presented on Feb 1. There is also talk that the integrated gold policy may reduce the import duty on the yellow metal to 4% from the current 10%.

 

"Every year, there is clamour in the market about an import duty cut. This year too, customers have postponed their purchases expecting gold to get cheaper after the budget," said Paresh Chouhan, director of SPN Gold, a Mumbai-based bullion dealer.

 

"Demand might improve after Makar Sankranti on Monday when you have many auspicious dates for weddings etc. Till then, customers are likely to stay away," said Kumar Jain of Umedmal Tilokchand Zaveri.

 

Higher prices and weak rural demand had pushed India's gold imports down 15% to 749 tn in 2018, according to provisional data from Thomson Reuters GFMS. 

 

The GFMS team at Refinitiv pegged India's gold demand for jewellery in 2018 at 600 tn, down 4% from 2017, due to weak monsoon in many areas, floods in some key consumption regions such as Kerala in August, regulatory reforms, and high prices.  End

 

US$1 = 70.41 rupees

 

Edited by Ashish Shirke

 

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