At the end of June, the Modi government announced an increase in gold import duty from 10.75 per cent to 15 per cent. Due to which its price increased a lot in one jump. However, in some news in the international market, within two weeks, the price came back to the previous place. Which is providing relief to the concerned quarters. The gold industry is hoping that the market will recover if this trend continues and gold prices fall further.
After adding 3% GST along with the increased import duty, traders have to import gold at a tax rate of 18%. The Centre claimed that the purpose of the tariff hike was to curb the huge import of gold and control the trade deficit. Finance Minister Nirmala Sitharaman said increasing imports puts pressure on foreign exchange reserves. So it should be discouraged. If imports have to be made, the importer should be more revenue oriented. The market feared that this would reduce the demand for jewellery as prices in the country increased with the increase in import costs, the business would be in loss. However, it has been seen that the price of gold in the international market which was 1800 dollars per ounce at the beginning of the month, has now come down to 1743 dollars. As a result, the cost of imports has not increased much.
According to the Bullion Merchants and Jewellers’ Association, the price of gold per 10 grams (24 carats) was Rupees 51,500 on June 30 before the import duty was hiked. After the announcement, on July 1, the price jumped by Rupees 1,100 to Rupees 52,600. This week it reached the doorstep of 53 thousand. Finally, on Saturday, it came down to 51650 rupees.
Comments from the traders
Harshad Ajmedha, a gold trader and director of JJ Gold House, said the rupee has recently depreciated against the dollar. It exceeded 79 rupees per dollar. In this situation, many investors are investing in American currency. In addition, interest rates have risen in various countries, including the United States, India and the United Kingdom, to cope with rising prices. As a result, the attractiveness of bonds has increased as a relatively safe investment destination. These are the two reasons behind the fall in gold prices in the international market. Apart from that, every year in July, the price of gold decreases in the world market. This time too it was no exception. That trend is now giving relief to the traders. They were counting the days for fear of losing business if the price of gold increased.
On top of that, the US Federal Reserve has indicated that it will raise interest rates several times in the remaining months of this year. According to some experts, the price of the yellow metal may fall further in the world market. Then it will have a positive effect on the price in the country. Its benefits may result in the festive season and its subsequent wedding market.