Import curb takes away gold's lustre

Import curb takes away gold's lustre

Losing its sheen for the second year in a row, gold turned cheaper by over 10 per cent in 2014 as the government tried to divert investors away from this 'unproductive asset', even as import curbs led to a rise in smuggling of the yellow metal.

For silver, the year has been even worse with a fall of about 20 per cent in its price. As the year 2014 draws to a close, gold prices have fallen to nearly Rs 26,000 per 10 grams from close to Rs 30,000 at the end of 2013. For silver, the fall has been even sharper at about Rs 36,000 per kg from close to Rs 44,000 at the beginning of 2014.

The fall in prices of the two precious metals came amid import curbs on gold for a significant part of the year, even as RBI has now eased some of these curbs.

A strong rally in the stock market, which is emerging as a preferred investment class, and sustained selling pressure from bullion stockists, coupled with weak trends in global metal markets, further dampened the sentiment in the precious metal market in India, experts said.

After starting the year at around Rs 29,800-level, the standard gold (99.5 purity) touched its yearly high of Rs 30,795 per 10 grams on March 3, but started moving downwards thereafter and has touched a low near Rs 26,000 this month.

Pure gold (99.9 purity) also recorded a high of Rs 30,945 per 10 grams early in the year, but soon began falling and touched a low near Rs 27,000 in December.

Silver also scaled a peak of close to Rs 50,000 early in the year, but is headed to end the year near Rs 36,000-37,000-level. It had ended 2013 at Rs 44,230 per kg.

A sharp appreciation in the US dollar against the Indian currency added to the selling pressure in gold, while festival demand also remained relatively weak this year.

Government had imposed severe restrictions late last year on  gold imports, including an increase in import duty to 10 per cent to check burgeoning current account deficit and sliding rupee. The steps, in line with the Centre's aim to help lower gold imports, also led to increased instances of smuggling.

However, some restrictions were eased in May, just before the previous UPA government's tenure ended, while further curbs were lifted last month under the new regime.
PTI

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