MUMBAI: Do you know why India has suddenly become an exporter of gold from top importer of the yellow metal? The secret is that in domestic market gold traders were selling gold at a discount of around Rs 300 per 10 gm. This has egged on India’s leading gold importers to export the yellow metal and earn profits from the foreign shores.
As a result, India exported over 10 tonnes of gold to Dubai, which is the traditional source of India’s imports. India's the world's largest importer and consumer of gold.
With February and March seeing India’s gold imports coming down to zero level, April may witness a rise in imports following the yellow metal’s downfall in the global markets.
Gold prices have come down in the past one week in international markets and the demand for the metal is expected to go up in India with the onset of festivals.
India’s gold imports was 20 tonnes in the first quarter of 2009 as compared to 141.2 tonnes in the corresponding quarter last year.
Another factor which will boost the Indian imports of gold is that the banks in the country have hardly any stock of gold to sell now. According to experts, Indian banks have just 6 tonnes of gold with them which is not even enough for two days’ consumption in the country.
India has been witnessing a surge in scrap gold sales following the rise in gold prices in the recent past and old gold was fetching good money for people. Moreover, job losses and other recession related reasons were forcing people to sell old gold.
But, the scrap gold sales have also come down in India now following the slump in prices.
The average old gold arrival in shops during the past few weeks was at 500 kg but tat has climbed down to around 200 kg level now.
Another factor which will boost gold sales in India in the coming months is World Gold Council’s (WGC) increased efforts to lift the sales.
Gold prices were quoted at $877 an ounce in London (Rs 14,170 per 10 gram) on Monday.
Last year, India imported 740 tonnes of gold. The demand of gold will revive in the days to come if the price retains this level at least for one week, said experts.
Standard gold price in Mumbai spot market fell 2.3 per cent on Monday to close at Rs 14,250 per 10 gm despite the metal moved range-bound at $877 in London. The precious metal fell 6 per cent in the domestic and 4 per cent in the international market.
One reason for the slump in gold prices is the revival of equity markets across the globe, following the G20 announcement of stimulus package worth $1.1trillion.
Gold prices in Mumbai market had hit an all-time high on February 20 at Rs 16,040 per 10 gm, up 34 per cent on the year.
Source : Commodity Online