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RBI’s move put pressure on customer’s side

RBI’s move put pressure on customer’s side

Bullion Bulletin News desk, August 05: RBI’s recent move to tighten the gold imports further by tying the imports with jewellery exports has resulted in a supply shortage for the domestic market. With lesser stocks available in the market and restrictions on imports, jewellers are propelled to give premiums just to fulfill the demand.

Some of the market leaders of jewellery industry have provided a brief view of the market amid policy changes and huge restrictions.

Providing a view on Andhra Pradesh market, Mr. Bhavdeep from Bhavdeep Jewellers told that with no involvement of banks in case of gold imports, the yellow metal availability is almost stopped for the time being opening way for illegal trading. While the local gold price is at Rs. 28900/10 grams, demand is in zero level due to the policy restrictions and the political uncertainties in the state. Jewellers are facing problems due to zero stocks leading to closure of shops. Still hope is, as the marriage season starts jewellery demand will improve against all odds.

Mr. Amit Modak from P N Gadgill Jewllers provided a clearer picture on the same. He said, “RBI’s measures have only put pressure on the customer side. As the restrictions result in increase in carrying cost, procurement cost that ultimately inflate the base price along with the high premium level, finally the end consumers have to bear the burden.  There is a price disparity of Rs. 3000/ounce in the market now as traders are paying premium of $30-50/ounce over the international price. Talking about the jewellery demand, the affection of people for it will never diminish as there is hardly any great reduction (5%) from the previous year. There is chance that bullion trading may come down due to the unrest and high parity.”

Talking about the near future, Mr. Modak anticipated that with a very good monsoon this year and an elongated marriage season, the market will see positive movement after 45-60 days time period as the demand increases. For the rest of 2013, the international gold price will be at $1240-1600 range while the domestic gold price will be at Rs. 30000 (+/- 200) range due to the rupee depreciation factor.

Mr. N. K. Jain of Rara Borthers Pvt. Ltd. is big name in the jewllery business of North East India based in Guwahati, Assam. While interacting, he mentioned that North East India is an emerging market in domestic gold business with an annual demand of 20000 kgs. Currently demand has been down after 15th June due to the policy restrictions in gold imports. Particularly in June-July period, there is a 50% reduction in demand from the previous year. As the festive season and marriage season demand starts in September-October, he is expecting a good demand with a 25-30% increment against all odds.