Gold prices climb down as import curbs eased.

KOLKATA: Reserve Bank of India's move to ease imports of gold have brought down prices to Rs 27,600 per 10 gm but consumers are still not flocking to buy the precious metal in anticipation that prices may further fall after Narendra Modi fomally assumes office on Monday.

But the shine is back among exporters as they think that pure gold jewellery exports will increase by 15% in the current fiscal as supply of the precious metal will improve.

Prithviraj Kothari, vice-president, Indian Bullion and Jewellers Association, said investors were looking at the stock market, and there is no festival to prop up retail demand. "Generally, demand slows down in June and July as there is no major festival in these two months. So, we will not see much of a buying unless gold prices drop to Rs 25,000 per 10 gm level.

A strong equity market is attracting investors now. They are not finding gold lucrative right now. Therefore, in this scenario, imports should be around 70-80 tonnes in these two months," he told ET.

Bachhraj Bamalwa, director, All India Gem & Jewellery Trade Federation (GJF), said the new government is expected to introduce fresh relaxations on gold trade as current account deficit (CAD) is now under control. "There is a feeling in the market that import duty will be reduced from 10% to 4% in the upcoming budget.

If that happens and rupee continues to remain strong, gold prices can come down to Rs 24,000-25,000 per 10 gm. At that level, we think there will be heavy buying. But right at this moment there is no rush for gold."

A section of trade feels that smuggling, which had gone up significantly following the introduction of the 80:20 rule, will drop. Rajeev Sheth, CMD, Tara Jewels, said "RBI's move is hopefully the first in a series of measures which will totally ease curbs on gold imports and, thus, get into the formal system the gold that is being at present diverted to the grey market."

Exporters are happy over RBI's move. "Gold jewellery exports, which suffered a major setback in FY14 due to non- availability of raw material, will surge by 15% in the current fiscal. Studded jewellery exports will, too, see a rise," said Vipul Shah, chairman, GJEPC.

Source : economictimes.indiatimes.com