Indian Gold at Record High, Leap In Smuggling

India Gold Prices Hit Record High, ‘Demand Good’, Smuggling Jumps

Adrian AshBullion.Directory precious metals analysis 06 February, 2019
By Adrian Ash

Head of Research at Bullion Vault

GOLD PRICES held flat in US Dollar terms in London on Wednesday, keeping a $5 drop for the week so far but rising towards new all-time highs for households in world No.2 consumer market India.

Euro gold and the UK gold price in Pounds per ounce both rose, hitting 22-month highs above €1155 and 3-week highs at £1017 respectively as politicians from the European Union and the UK got no nearer to resolving the ‘Irish backstop’ part of their Brexit deal rejected by lawmakers in London last week.

Gold priced in Dollars meantime held around $1313 as world stock markets slipped after US President Trump’s annual State of the Union address called for an end to what he called ” the politics of revenge” but failed to highlight any progress in the key US-China trade talks.

Who won Bullion Dealer of the Year 2018?

best gold dealer 2018

Your Top Choice in 2018 from 27,000 votes!

VIEW WINNER

“Relatively muted price action again for bullion during Asian trade today,” says one trading desk, noting the absence of No.1 consumer market China thanks to this week’s Lunar New Year holidays.

Over in India however – the metal’s second largest consumer market – retail gold prices today reached above 33,000 Rupees per 10 grams in Mumbai and over Rs 34,000 in Ahmedabad, nearing new all-time record highs.

The Rupee meantime slipped back to trade at what were new all-time record lows when first reached last September.

Coming after wholesale gold prices in India last week rose to a slight premium to global quotes, today’s gold prices match the record-high Rupee cost for consumers of August 2013, when India’s then-Congress Party government rushed out a series of severe anti-gold import rules to try and stem the country’s huge balance of payments deficit, worsened by record-high gold demand amid the metal’s steepest Dollar-price drop in three decades.

India today continues to charge 10% import duty on gold bullion, plus extra VAT sales tax on jewelry since 2017.

Wholesale prices in the sub-continent have now traded at a discount to London on 75% of all business days over the last 3 years according to data compiled by the mining-industry backed World Gold Council, suggesting weak domestic demand against plentiful supply.

http://aws-goldnews-en/sites/default/files/india-premium-6-feb-19.png Chart of India gold price premium/discount to London quotes. Source: World Gold Council

“Despite high prices, demand for gold jewelry has been good, mainly due to the ongoing wedding season,” the Times of India quotes one retailer.

“We expect purchase to remain good for another month, before the Holashtak or inauspicious period sets in.”

Late-2018’s rising gold price for India consumers “saw a rise in the number preferring to exchange existing gold for new pieces” said the WGC of India’s jewelry business in its global demand update last week.

“This was particularly prevalent in the south and west regions, where some retailers reported an increase of up to 45% in [this type of] exchange activity.”

India’s police and Customs officials meantime report “an extra push from smugglers to bring in more quantity of gold,” reports the New Indian Express, with gangs looking to exploit today’s near-record high retail prices for legally-imported and retailed products.

“When smugglers used to bring less than a kilo of gold before,” says Customs Commissioner Sumit Kumar, “they now take additional risk and smuggle in more quantities.”

Following last week’s pre-election giveaways in India’s national 2019 budget – widely expected to boost gold demand in the key rural states – the finance minister of Assam today promised a raft of subsidies and gifts for the northeastern state’s citizens, including free electric bicycles for each student passing this year’s senior school exams, rice priced at just 1 Rupee per kilo for 5.3 million families, and 1 tola of gold (currently worth around $500) for brides whose families earn less than $7,000 per year.

Formerly a politician for the Congress Party – dominant in Indian politics until Narendra Modi’s victory in 2015 – Himanta Biswa Sarma quit to run on the ticket of today’s ruling BJP in May 2016.

This article was originally published here
Bullion.Directory or anyone involved with Bullion.Directory will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading in precious metals. Bullion.Directory advises you to always consult with a qualified and registered specialist advisor before investing in precious metals.

FREE REPORT: 5 "Tells" that the Metals Markets Are About to Reverse

elliot-wave-reportJump on once-in-a-lifetime opportunities and avoid dangerous pitfalls no one else sees coming.

We can help you prepare for opportunities and side step risks that will surprise most investors. The insights that you'll gain are especially applicable to the price patterns of key financial markets, including precious metals and the stock market now.

Read the Free Report Now - Immediate Access, No Email Required.

Leave a Reply



  I accept your GDPR / Data Protection Policies