Gold imports will pick up: Traders

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Chennai: June saw a 80 per cent drop in gold imports. Even so, bullion traders believe that despite all steps taken by the government to curb gold imports the festival season demand would perk up import of yellow metal.
 
Gold imports have fallen to around 31 tonnes, down from 162 tonnes in May and 141 tonnes in April. “The drop in gold imports is not only because of customs duty, which was hiked to 8 per cent from 4 per cent last month, but also due to seasonal factors.
 
Usually during June, educational expenses and agriculture harvesting would bring down retail sales of gold, thereby pulling down gold imports,” said Chennai’s leading bullion trader Daman Prakash, who added that gold imports would pick up next month when the marriage and festival would begin.
 
Retailer Ajay Vummidi noted that gold imports would have come down on its own without government intervention as it was just a matter of time before the price dipped. “With lesser sales, gold imports would have reduced naturally,” he said, adding that till a few years back, the import duty was not even one percent.
 
A gram of 22-carat gold sold at a lowly Rs 2,509 on Sunday compared to Rs 2,747 on the same day last year. However, G. Ramachandran, a city-based financial analyst said that government measures were needed in India.
 
“They buy gold as an investment, but never convert it to liquid cash. So, more gold imports weaken the rupee adding to current deficit. While keeping to the free-market view, the government has done a good job by increasing customs duty,” he added. 
 
Madras Chamber of Commerce economic affairs committee member M. R. Venkatesh said that it would be difficult to wean people away from investing in gold, unless the interest rates are increased. According to him, gold is one of the important saving instruments in the Indian household.
 
“Till the very last Indian lady drops dead, we cannot stop people from buying gold,” he added in a lighter vein.