KOLKATA: The import of gold by Indian trade has gone down drastically with a weak rupee keeping gold traders on the edge.
Gold sales are down by 70-80% on a daily basis, say jewellers and bullion dealers. Though the market reopened on a strong note on April 7 after a 21-day strike, demand fizzled out subsequently on account of high prices.
The most active gold contract for June delivery on the Multi Commodity Exchange (MCX) was hovering around Rs 28,476 per 10 gram after hitting a high of Rs 28,558 per 10 gram on Tuesday. The Comex gold was flat at $1,652 per ounce.
But the weakness in the rupee, which plays an important role in determining the landed cost of the yellow metal, kept the downside in prices limited. The local currency was trading at 51.51 against the US dollar on Tuesday.
Bachhraj Bamalwa, chairman of All India Gem and Jewellery Trade Federation, said: "No imports of gold have taken place in the last one week after the market opened. The demand is lacklustre and there will be hardly any growth in the Akshaya Tritiya period this year."
Bullion dealers say that the high price is keeping the demand in check. "The rupee is weaker than dollar which is pushing up gold prices.
The US jobless data and the slowing down of GDP in China have left the yellow metal precious. There is a fear that gold price in India may touch 29,000 per 10 gram. The demand is almost negative compared to previous years," said Ashish Mundhra, director of Chennai-based Mundhra Bullion.
During this peak wedding and festival season, around 7 tonne of gold is sold everyday to jewellers. Due to the 21-day strike, about 10-12 tonne has piled up with the jewellers. "We have delivered pending orders but there is hardly any work as gold prices have gone up," said Rajendra Kumar Bader, vice president of Delhi Jewellers Association.
Jewellers across India called off a strike on April 6 after assurances from the Union finance minister Pranab Mukherjee that the government would consider scrapping the proposal of imposing an excise duty on unbranded jewellery.
A final decision will not be known until May 7 when Parliament is expected to consider the Union Budget 2012-13 and any changes would be made public. The duties, which include doubling import taxes to 4%, could dent India's gold imports by a third to 655 tonne in 2012, allowing China to overtake it as the biggest gold importer, feels Mukesh Kothari, director, Riddisiddhi Bullion.
For demand to pick up, global prices will have to fall by about 9%, felt Nitin Nachnani, a research analyst at Geojit Comtrade. "A correction in gold to $1,500 an ounce could help physical players," Nachnani said.
Source : economictimes.indiatimes.com