Gold imports touched record low in July.

AHMEDABAD: Despite relaxation in curbs in May this year, gold imports in the state fell to a record low in July. Less than 4 metric tonnes (MT) of gold was imported in July following boycott of STAR Trading Houses by bullion traders and an increase in gold smuggling.

According to the latest figures, 3.06 MT of gold were imported in July 2014--the lowest figure for July in the last six years -- compared to 8.9 MT in the same period in 2013, recording a decline of 58%. In June 2014, for the first time, gold imports crossed double digit figures (17 MT) since June 2013 when restrictions on gold imports were imposed by the central government to control current account deficit (CAD).

The slump in imports happened after bullion traders boycotted STAR trading houses following the limitations put by government on gold imports by PSUs and banks. "These trading houses were allowed to import large consignment based on their total monthly imports of last two years. But imports by banks and PSUs were linked to their monthly supply of gold to exporters in the last three years which when calculated is very low in comparison to the trading houses," said a city-based bullion trader.

Industry insiders say that spurt in imports in June was only due to relaxation to STAR trading houses by the Centre. A writ petition has been filed in Delhi high court by a Delhi-based body representing bullion dealers and jewellers against the selective relaxation to premier trading houses. UPA government had introduced 80:20 rule which mandated that 20% of imported gold be exported, however it could not revive the imports. Bullion traders are also of the view that gold is easily available in the market because of unprecedented rise in smuggling which in turn is not letting the prices to go down.

In Gujarat alone, over 130kg of gold has been recovered in 2014 by the central intelligence agencies from smugglers.

"If RBI does not take action in the near future, the prices of gold may rise during the upcoming festival seasons," said a bullion trader.

Meanwhile, silver imports recorded a small rise in comparison to June 2014 as 6.87 MT of silver were imported in July 2014. However, it was way below 274.92 MT imported in July 2013.

Source : timesofindia.indiatimes.com