Gold imports grind to a halt

Despite the government removing restrictions on gold imports late last month, imports of the precious metal have not picked up due to a supply glut. 

Industry sources say that hardly 15 tonne of gold has been imported in December so far on consignment basis. For two weeks after government lifted the 80:20 scheme, there were absolutely no imports, they added.

Under the consignment route, importers have to make payments to overseas sellers only after the goods are sold and proceeds realised. Before May 2013, when the consignment route was banned for gold imports, most imports were done using this route Stock Market Trading Tips

“Post 20:80 scrapping, imports continue to happen from dore refiners (bullion refineries who import raw-dore gold), which will come to the market only after refining on consignment basis. However, it is very limited due to existing supply glut and slack demand due to price sensitivity and seasonal reasons, ” said Sudheesh Nambiath, senior analyst- precious metals, GFMS Thomson Reuters.

Meanwhile, gold prices are being quoted at a discount because of oversupply and lack of demand Financial Astrology Trading Tips

The supply is high because of heavy imports earlier. Traders have also started importing gold jewellery from Indonesia under the free trade agreement by paying just 1% duty. Reports suggest that even 24 carat jewellery is being imported under this route. Such imports are coming in at New Delhi and Hyderabad. 

The demand is also weak as the first phase of marriage season has ended.  

Traders also cite lack of clarity in the import policy. Banks have stopped importing gold as they are concerned about meeting export commitment for gold imported till 28 November when the government scrapped its 80:20 scheme Nifty Trading Tips