India Gold markets still on Akshaya Trithiya break
Analysts said any further increase on gold bars and coins may deter jewelry buyers and investors before the monsoon arrives.
Indian gold markets are yet to recover from the 'Akshaya Trithiya break' as major players await further guidelines from country's central bank on gold imports.
Gold sales dropped as people and traders alike wait for further directions from authorities and also hope for big fluctuations in prices as in the mid-April plunge.
The Indian households' jewellery purchases depend largely upon discretionary spending power which is affected by a reduction in the savings rate driven by high consumer price inflation and muted wage growth.
Additionally, the emergence of alternate investment options such as gold exchange traded funds, gold coins and bullion may structurally reduce demand for gold jewellery as an investment option.
Thus, business risk facing this sector is likely to increase and may be reflected by a higher volatility of revenue and margins, in line with the business cycle.
To curb the widening current account deficit, India banned the import of gold on payment of margin basis, following up on a 50 percent import duty hike in January.
The tax on bars and coins was doubled to 4 percent in March after imports jumped to a record 969 metric tons in 2011.
Analysts said any further increase on gold bars and coins may deter jewelry buyers and investors before the monsoon arrives.
They added that supplies may remain tight until fresh guidelines on imports are issued by the Reserve Bank of India, probably later in the month. India's gold imports plunged 42 percent to 340 tons in the first half
Sumber : Google
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