India's gold import curbs to stay longer, Premiums to average at $3-$4 per Oz in 2014

NEW DELHI (Scrap Monster): According to MMTC-PAMP India Pvt. Ltd.- the country’s largest gold refiner, the gold import curbs in the country are expected to stay for longer period. Consequently, gold premiums are likely to average at $3-$4 per Oz in 2014. Furthermore, the supply shortfall in gold will be met through smuggled gold, it noted.

In fact, the gold import curbs have tamed the CAD to multi-year lows of $32.4 billion during the fiscal ended March 31^st. The restrictions on gold imports are likely to become permanent. Rajesh Khosla, Managing Director, MMTC-PAMP noted that gold is currently the least priority for the government. It has more important issues to be addressed in the country’s infrastructure, manufacturing and agricultural sector. The government is most unlikely to address the gold issues in the immediate future.

The gold premiums in India will drop to $3-$4 per Oz in 2014, Khosla added. The premiums had averaged in the range $8-$10 during 2013. The excessive shortage of the yellow metal had at one point pushed the premiums to as high as $160 per Oz during 2013. However, falling gold demand is likely to lower gold premiums in the country. The recent report released by the World Gold Council indicates that gold demand in India dropped by 39% to 204.10 tonne year-on-year during Q2 2014. The gold demand is expected to remain subdued during the rest of the year, mainly on account of deficient monsoon.

According to Khosla, tight curbs on gold imports have resulted in huge drop in official gold imports by the country. The imports fell to 351 tons during the first half of the year, in comparison with 620 tons imported during the corresponding period in 2013. Robust festive season demand in the country is feared to create a gold deficit of 300 tonnes, which has to be met through smuggling, Khosla added.