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Gold November 20, 2014 06:30:07 AM

Ambiguity over import policy spurs gold hoarding in India

Paul Ploumis
ScrapMonster Author
The importers and big bullion traders in the country are reported to be holding on to their gold stocks in anticipation of higher

Ambiguity over import policy spurs gold hoarding in India

NEW DELHI (Scrap Monster): The importers and big bullion traders in the country are reported to be holding on to their gold stocks in anticipation of higher premiums on account of rumors that the government may introduce fresh curbs on gold imports. The All India Gems and Jewelry Trade Federation (GJF) alleged that the uncertainty over gold import policy has led to gold hoarding in the country.

The media in the country have been talking about the government’s intention to curb gold imports into the country to bring CAD under control. Of late, there were rumors that the policy is made already and it just needs to be announced. The RBI officials had held several rounds of discussions with Finance Ministry officials last week. So far, no policy announcement has come from the government, allowing speculators to raise premiums on gold. As per industry sources, importers are seen demanding higher premium of $17-$18 per Oz when compared with $8-$10 before.

Ever since festive season commenced in the country, gold imports have witnessed sharp surge. The official gold imports by the country jumped to 143 tonnes in September and 150 tonnes in October.

According to GJF, nearly 40 to 50 tonnes are being hoarded by big bullion traders and private importing agencies. The trade body alleges that, despite huge increase in gold import volumes, the yellow metal is not readily available for jewelers. Dealers and importers are seen holding gold in anticipation of policy announcement.

Further, GJF noted that investment demand for gold has fallen significantly in recent times due to sharp decline in gold prices. Therefore, the imported gold is primarily used for manufacturing jewelry and not for investment purposes.

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