The price of gold is trading near its all-time high on account of tension after terror attacks in India and Iran.
In the international market, gold is trading at $1,324 per ounce (for gold, one ounce is 31.1 gm). However, in Mumbai’s Zaveri Bazar, standard gold closed at Rs 33,365 per 10 gm, a price higher than the previous close of Rs 33,265 seen in November 2013.
During intra-day trading, however, in last January gold traded at a higher price. At a high price, demand is minimum and that was reflected in import figures.
In January, gold import was only 50 tonnes, and that too was because of wedding-related purchases.
A month ago, gold was trading at a discount of Rs 200 per 10 gm. The price in Mumbai is around import parity although traders said in Kolkata price was at a discount of Rs 50 per 10 gm.
Even those who are buying jewellery are converting old jewellery into new. At a high price, selling old jewellery is the first preference.
Marketeers said in the aftermath of the Pulwama terrorist attack in Jammu Kashmir last week, India has increased scrutiny to prevent terrorist action, which has made gold smugglers very cautious. Official gold import in India is in the range of 750-850 tonnes per year, but unofficial import is also high for the past few years. In the last three years, it was estimated at 100-125 per annum. In coming months, bringing unofficial gold will be a risk.
Surendra Mehta, national secretary, Indian Bullion and Jewellers Association, said “now there will be pressure on easy smuggled gold movement. Also due to tension in Asia the gold price is likely to escalate. This tension will also put pressure on the rupee, making gold costlier in India”.
For the past five years smuggling is high due to 10 per cent import duty. To send dollars abroad to pay for unofficial gold, people have to spend 3-4 per cent more as hawala premium and, cutting other cost for paying carriers who bring gold to India, they were making the same 5 per cent returns. Now some channels are being developed in which the Indian currency is used to finance smuggling.