 "Poor demand saddles gold dealers, jewellers with high stocks")
Bullion dealers and jewellers have huge unsold stocks of gold they’re unable to offload.
They couldn't sell these due to the earlier strike and the high prices. And, despite now offering a discount up to $15 an ounce or Rs 330 per 10g to the landed cost.
New imports are also minimal. In April, it was 30 tonnes and so is the estimate for May. Analysts say demand has not been seen even after the jewellers’ strike was withdrawn and is expected to remain dull for a few more months.
The one per cent excise duty imposed on gold jewellery in the Union Budget triggered a strike from March till mid-April. Prior to the Budget, there was widespread expectation of an import duty cut, which didn’t happen. Buyers have waited for months to buy gold or jewellery at Rs 27,000 per 10 gm but prices went above Rs 30,000 and demand didn’t revive even after withdrawal of the strike.
Chirag Sheth, consultant for Mumbai with Metal Focus, a precious metals research outfit, says: “Our field research suggests high stock levels by refineries, retail jewellers and manufacturers or traders. The local discount is, therefore, unlikely to improve until there is a major fall in these local inventories.” After the Budget, due to duty changes, refineries had also put operations almost on a halt. In early May, the government made some changes which helped them to resume.
James Jose, secretary, Association of Gold Refineries and Mints, said: “The government relaxed modified the gold import/excise tariffs from 9.5 to 9.35 per cent, giving us some more breathing space in bullion manufacturing vis-a-vis imported bullion at 10 per cent import duty.”
By a notification issued on March 21, the Uttaranchal government, where several gold refineries are situated and enjoying excise-free status, imposed an entry tax of 0.2 per cent on these, bringing down their margins. The differential between a refiner in the excise-free zone and those elsewhere has reduced from 0.75 to 0.4 per cent. Consequently, “Gold refineries have come out of their near-closure situation and resumed import of dore (unrefined gold) from mines abroad,” said James.They couldn't sell these due to the earlier strike and the high prices. And, despite now offering a discount up to $15 an ounce or Rs 330 per 10g to the landed cost.
New imports are also minimal. In April, it was 30 tonnes and so is the estimate for May. Analysts say demand has not been seen even after the jewellers’ strike was withdrawn and is expected to remain dull for a few more months.
The one per cent excise duty imposed on gold jewellery in the Union Budget triggered a strike from March till mid-April. Prior to the Budget, there was widespread expectation of an import duty cut, which didn’t happen. Buyers have waited for months to buy gold or jewellery at Rs 27,000 per 10 gm but prices went above Rs 30,000 and demand didn’t revive even after withdrawal of the strike.
Chirag Sheth, consultant for Mumbai with Metal Focus, a precious metals research outfit, says: “Our field research suggests high stock levels by refineries, retail jewellers and manufacturers or traders. The local discount is, therefore, unlikely to improve until there is a major fall in these local inventories.” After the Budget, due to duty changes, refineries had also put operations almost on a halt. In early May, the government made some changes which helped them to resume.
James Jose, secretary, Association of Gold Refineries and Mints, said: “The government relaxed modified the gold import/excise tariffs from 9.5 to 9.35 per cent, giving us some more breathing space in bullion manufacturing vis-a-vis imported bullion at 10 per cent import duty.”
According to Sheth, “Gold demand in India remains lacklustre and we are also entering a seasonally quiet period. Our forecast is that demand will only start to improve after the monsoon.”