Author: Paul Ploumis09 Jun 2014 Last updated at 08:28:22 GMT
NEW DELHI (Scrap Monster): The Reserve Bank of India’s (RBI) move to ease gold import norms by allowing star and premier export houses to trade-in the yellow metal has started showing results. The import flow has gained momentum, sending the spot premium on gold to lower levels. The premium for physical delivery during the week fell to $20 per Oz over spot LME from $30-$40 per Oz during last week.
The government is yet to clarify on whether the gold import duties will be reduced. Analysts however feel that the government may not immediately go ahead with duty cuts, as low gold imports still remains the main weapon in their armory to fight rising CAD. Meanwhile government sources indicate the possibility of 2% to 4% cut on heavy gold import duty structure to be announced in the maiden budget of the newly elected government.
The gold industry in the country also believes that pro-Gold Modi-led government is bound to make changes to the existing gold policy. They cite the earlier statement made by him during election campaigning that any action on gold should take into account the interests of the public and traders, not just economics and policy.
According to industry experts, relaxation of gold import duties may not lead to further fall in gold premiums, as market has already started discounting for the gold import duty cuts.
Meanwhile, spot gold prices in India have fallen to sub-Rs.27,000 per 10 grams, touching 11-month low.