The prices of gold fell sharply by Rs 800 to Rs 27,800 per 10 gm in the spot market on Thursday, a day after RBI eased gold import norms to boost exports and allowed seven more agencies to import the precious metal.
As bullion traders, this is the biggest decline during a session in gold prices since August 2013, when the Government had introduced the 80:20 rule, when the government had tied imports with exports and prescribed a 20:80 formula. Under this, an importer has to ensure that at least 20 per cent of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use. This facility was available to select banks only and other entities were barred from importing the metal.
“The fall in prices is be good for consumers as it will boost the market supply and reduce prices of premium on gold has already begun to fall Currently, the premium is approximately $ 55 -. $ 60 an ounce. It has dropped from as high as $ 110 per ounce. Letting Go, we feel that the premium should go down to $ 25 per ounce, “said bullion traders.
Commenting on RBI move, said CEO of the World Gold Council (India) PR Somasundaram. “This is a positive development and a staged approach for eventual phasing out of restrictions on gold imports. This is expected official supplies increase gives a wider spectrum of players with the right of import and re-enter the market. yet the 80:20 scheme still goes on and you can still be a shock. ”
Somasundaram added that RBI’s decision to permit the nominated banks to give gold metal loans to domestic jewellery manufacturers out of the eligible domestic import quota of 80% would also relax some cost pressures that the jewellers were facing over the past few months.
In futures trading, gold prices fell 0.2% by midday.At MCX gold June contract was trading at Rs 27310 per 10 gram, down Rs 63, or 0.23 percent. The gold rate touched an intraday high of Rs 27520 and an intraday low of Rs 27225.
In global market, gold remained below $ 1,300 an ounce, after the Federal Reserve said it saw a risk of inflation hushed and assets in the SPDR Gold Trust dropped to the lowest level since December 2008.
News by Economictimes
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