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RBI move pulls gold prices down

Cost cushion

Mumbai, May 22: Gold prices today fell to a 10-month low in response to the Reserve Bank’s decision to allow more entities to import the yellow metal.

In Calcutta, the price of standard gold (99.5 purity) fell Rs 605 to Rs 28,340 per 10 gram.

In Delhi, the yellow metal plunged Rs 800 to Rs 28,550, while it ended lower by Rs 780 to settle at Rs 27,690 in Mumbai.

Market circles said the fall in prices was in reaction to the central bank’s move to allow star and premier trading houses to import gold under the 20:80 scheme, which makes it mandatory to export 20 per cent of the imported gold. The decision is expected to improve the availability of the precious metal and bring down domestic prices.

The RBI in July last year had imposed severe restrictions on gold imports to check burgeoning current account deficit and the sliding rupee.

The relaxation of curbs has been welcomed by the industry and traders.

“This is expected to increase official supplies as a larger spectrum of players with an import entitlement can now re-enter the market,” World Gold Council managing director India Somasundaram PR said in a statement.

He pointed out that the RBI’s decision to permit the nominated banks to give gold loans to domestic jewellery manufacturers of the import quota of 80 per cent would also relax the cost pressure that the jewellers were facing in the last few months.

The decision also had its impact on the stock exchanges with the share price of Titan rallying 6.55 per cent and Tribhovandas Bhimji Zaveri hitting the upper circuit.

 
 
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