Mumbai, March 31 Gold seems to have stopped glittering for Indian consumers. For the second consecutive month, not a single tonne of gold was imported in March against 21 tonnes imports during the same period a year ago.
Gold imports in the first quarter of the financial year were just 1.9 tonnes (recorded in January) against 55 tonnes in the same period a year ago. In fact, imports have been on a constant decline. Gold imports fell 48 per cent to 396 tonnes in 2008.
Mr Suresh Hundia, President, Bombay Bullion Association, said: “As far as the information we have, there were no reports of gold imports reported in March”.
Apart from high gold prices, people have postponed jewellery purchases due to uncertainty in global and Indian markets, which has lead to large scale retrenchments across sectors.
Exports
For the first time in several years, India managed to export about 9 tonnes of gold coins in February and March.
Domestic gold prices were about three to four per cent lower than the import cost. So some of the traders bought gold from the local markets and converted them into coins and exported it, said Mr Hundia.
Exports of gold coins slowed down in March as the gap between global and local prices narrowed from the February level, he added.
“We managed to export one tonne of gold coins for the first time in February…there was hardly any demand in the domestic markets,” said a top official of bullion trading firm in Mumbai.
The Reserve Bank of India restricts gold exports by traders in bullion market as it impacts the partially convertible rupee. However, value-added gold, such as jewellery or coins, can be exported, said a trader.
Though the exports are not against government norms, it is done with high level of secrecy as gold coins could be used by the buyer as bullion, something the government wants to avoid.
“Most of the coins that are exported may find its way back to the Indian markets, probably with or without a value-addition, thereby impacting the value of rupee,” said an analyst.
Scrap gold sale
In a bid to take advantage of the high prices, many people sold off their gold jewellery in February and March. Scrap sale of gold jumped almost four fold in last two months, especially when the prices crossed the Rs 16,040 for 10 gm in February. Gold on Tuesday closed at Rs 15,105 for 10 gm.
Scrap gold sale in Mumbai alone was about 7 tonnes each in January and February, said Mr Hundia. “Scrap sales have reduced in March, but domestic demand has also waned," he added.
“As against the normal scrap sale of one or two kg a day, we did about four to five kg a day in January and February. However, the scrap sale has come down of late as people expect prices to go up again,” said Mr Viren Shah, Joint Partner, Lakshmi Jewellers, one of the leading scrap gold dealers in Mumbai.
Source : Business Line