Gold prices dip as customs duty slashed from 15% to 6%
Neeraj Bagga
Amritsar, July 28
Customers of gold ornaments will have to think twice before flying to the Gulf to buy jewellery after a decline of about Rs 5,000 per 10 grams of gold in the local market in the past few days. The decline in price cheered up the market and buyers which might prompt domestic demand. Traders dealing in gold ornaments attributed the fall in price to the slashing of customs duty from 15 to six per cent by the Union Government and fall in gold prices in the international market. Price correction in the yellow metal market is likely to curb the rise in gold smuggling.
Pankaj Khurana, a leading jeweller, said it was sheer coincidence that two factors in close proximity led to a sharp fall in prices within a short span. He added that the value of one ounce of gold in the international market was USD 2,470 a couple of days back which came down to USD 2,370. So there was a fall of about USD 100 per ounce in gold price in the international market. He added that making and labour charges besides other charges on gold ornaments are less in India as compared to abroad. So, there are strong chances that the customers will return to the domestic market.
The price of 10 grams of gold which was Rs 75,000 a day before the presentation of the Union Budget in the local market has fallen to Rs 70,000 on Friday. A sharp fall of around Rs 5,000 has brought good cheer to the retail buyers.
Vijay Mehta, president of Civil Lines Jewellers Association, said customers are upbeat over the fall in gold prices and many of them are coming out to buy ornaments, adding that many customers are holding up their funds in anticipation of a further decline in the price of yellow metal.
He elaborated that jewellers are equally happy over the reduction of custom duty on gold as a reasonable price would bring more customers to the market. Adding a word of caution, Mehta informed that jewellers and goldsmiths held back their investment in the yellow metal. Bullion market dealers categorically told them that the GST rate on gold would be applicable at the time of its delivery. He stated that there has been a strong rumour in the bullion market that the present three per cent GST may be hiked by the government. In such a scenario, chances of a price hike cannot be ruled out, he said.
