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Gold importers at bay, spooked by import tax talk

Source : REUTERS
Last Updated: Thu, Jan 03, 2013 18:53 hrs
Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh

Gold importers in India, the world's biggest buyer of the metal last year, retreated a day after rumours of an import tax hike, as prices hovered around their highest level in two weeks aided by a weaker rupee.

Worried by ballooning current account deficit, the finance minister hinted at making gold shipments more expensive, saying it was under consideration, but did not elaborate on the type of measures. India currently has a 4 percent import duty on gold.

The Reserve Bank of India also recommended restrictions on value and volumes on importing banks and agencies.

"Demand is not that good as people think international prices could correct to 30,500 rupees," said Ketan Shroff, director of Penta Gold, a wholesaler in Mumbai.

The most-active gold for February delivery on the Multi Commodity Exchange (MCX) was 0.25 percent higher at 31,121 rupees per 10 grams, after hitting a high of 31,165 rupees, near the previous day's peak.

The rupee, which weakened on Thursday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

In the overseas markets, gold inched up, holding near its highest level in two weeks hit in the previous session following a last-minute deal to avert a U.S. fiscal disaster.

Silver also extended gains in evening trade to stay near its highest level in two weeks. Silver for March hit a high of 59,340 rupees per kg, a level last seen on December 20, before trading 0.26 percent higher at 59,091 rupees.

The following were the prices of gold and silver in rupees at 4:15 p.m. in the spot market, quoted by HDFC Bank:



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