Citing industry sources, Commerzbank said the Reserve Bank of India is strongly supportive of new import restrictions following news that the value of gold imports in October soared by 280% year-on-year to $4.2 billion.
“That said, this is partly due to a base effect. Any further limitation of gold imports would probably also lead to increased smuggling, which cannot be the Indian government’s intention. In addition, Indian jewelry retailers could increasingly resort to silver,”
Another curve ball for Indian gold demand
According to ETF Securities, after loosening some of the restrictions on gold imports in May, the Indian government may re-tighten amid a strong resurgence in gold import demand. The Finance Ministry and central bank met last week to discuss without a decision, agreeing to reconvene soon.
ETF Securities believes the short-term impact of the discussions will be for consumers to increase purchases before any re-tightening. Historically, tighter restrictions have led to the price of gold being substantially higher in India than elsewhere.
Higher premiums that could follow a potential tightening of restrictions will how ever dampen demand going forward, reducing come of the support for the gold price in 2015.
Since 2011, India and China have been locked in a contest to become the world’s biggest consumer of gold, a position that Asia’s third largest economy recovered recently.
According to World Gold Council, for the three months ending September, India emerged as the biggest gold consumer in the world, buying 225.1 tonnes worth gold in jewelry, bars and coins.
No comments:
Post a Comment