Gold premiums in Mumbai have edged higher while imports of gold into India drop amid continued confusion over new legislation and after the peak demand season.
The Mumbai premium for gold has climbed to $5-8 per ounce on one-kg bars over the London spot price from $4-6 a week ago, sources told FastMarkets.
While demand for imported metal has slumped, domestic jewellery and investment demand remains robust – a source at one of the country’s biggest jewellers indicated that sales could be up five percent in the year to date following the surge at the end of the monsoon season in August
But confusion remains following the abolition of the 80:20 rule, which made it mandatory for companies to export 20 percent of any imported gold.
“I don’t think people here have got any wiser as to exactly what the rules on imports are at the moment,” Metals Focus Chirag Sheth said. “A large number of people are simply waiting for some clarifications from the government following the removal of the 80:20 rule.”
As little as 10 tonnes of metal might have been shipped into the country in December, other sources have indicated – one claimed to have seen “little in the way of shipments”.
Imports in November hit a still-to-be confirmed 110-120 tonnes on news that the Reserve Bank of India (RBI) was reviewing import restrictions.
A member of the RBI has since indicated that the recent crash in oil prices to multi-year lows has made the country “better placed” on its current account deficit (CAD) although it widened to $10.1 billion in the second fiscal quarter of this year, the Reserve Bank of India said on Monday, with the surge in gold imports cited as a contributing factor.
On Wednesday, the World Gold Council suggested that India should consider establishing its own gold exchange and in turn create a domestic pricing structure for gold derived from the London fix.
Sources in India have backed the idea, suggesting that a bourse along the lines of the Shanghai Gold Exchange would “do wonders for cleaning up the black-market” but that to succeed fully the government would need to “incentivise people to participate”.
Smuggling remains rife – stringent import duties and restrictions that have been in place since 2013 have encouraged the illegal flow of metal to the country, which vies with China as the world’s largest consuming nation.
In China, spot premiums on the Shanghai Gold Exchange remain at $2 over spot, with demand flat despite fluctuations in the gold price.
Physically delivered metal last week on the SGE totalled just 38 tonnes, the lowest figure since August, bringing total year-to-date wholesale demand to 1,905 tonnes.
Prices on international markets have recovered to current levels of $1,220 per ounce from four-year lows of $1,131.60 in October, albeit down from a 2014 peak of $1,388.
The Hong Kong premium is unchanged at $1.10, a five-week low, as was the Singapore rate at $1.20, while Dubai nudged up to $1, other sources said.
(Editing by Mark Shaw)
The post Gold premiums in Mumbai improve, December imports set to plunge appeared first on The Bullion Desk.
No comments:
Post a Comment