January gold imports may halve from Dec level

January gold imports are expected to halve from those in December, which climbed 71 per cent, year on year, to $3.39 billion.

India imported 81 tonnes of gold in December, up from 30 tonnes in the same month a year ago. In January 2017, 48 tonnes of gold were imported at a value of $2 billion.

The first half of this month was considered inauspicious for buying gold buying and hence demand had declined, sources said. Gold prices are also on the rise; in the past month international gold prices have increased 6.5 per cent to $1,337 per oz. In Mumbai, prices have risen 5.3 per cent to ~ 30,060 per 10 gm, their highest since September.

Bullion prices started rising from the middle of December and traders pre-empted imports ahead of a revision in tariff value in January. The government revises every fortnight the tariff value for calculating the gold import duty. Due to higher prices in the second half of December the tariff value was hiked in January. Importers had figured this out in advance and had advanced January imports.

Market players expect this month’s imports to be around 40 tonnes. This could be the reason for reports that the commerce ministry had proposed a lower gold import duty to keep it at a level adequate to discourage smuggling, which has not declined a year after demonetisation and in two quarters of implementation of the goods and services tax.

Due to expectations of a duty cut on February 1, when the Union Budget would be presented, traders and importers were cautious about importing gold, sources said.

The World Gold Council said today its demand outlook for India was positive.

“Policies such as the demonetisation initiative and the new goods and services tax will start to have a positive effect on the economy, improve transparency, broaden the tax base, and draw the informal, cash-based economy into the formal sector. Continued economic growth underpins gold demand,” the council said in its Gold Outlook 2018.