MUMBAI (Commodity Online): India's apex bullion traders' body, the Bombay Bullion Association (BBA) has commented on the increased import duty declared in the recent budget announcement of 2009. BBA believes that India’s demand for gold and silver is likely to get affected further this year with the rise in import duty.
Bullion trading business has been bad this year and this announcement is going to make things worse, according to BBA.
Import duty on gold bars is being raised to 200 rupees per 10 grams from the earlier duty of Rs 100/10 grams. BBA predicts that domestic demand could drop about 25% in the remaining six months of the calendar year of 2009.
Gold imports during January to June were about 59 tonnes, down 57 tonnes from 139 tonnes a year earlier, data from the BBA showed.
Meanwhile, the Indian rupee fell most in a week on speculation some importers took advantage of the currency’s appreciation to a two-month high to buy dollars and after stocks posted their biggest slide in a month. The rupee weakened by 23 paise closing at 47.75 against the dollar.
No change this year, let’s look out for the next year
The European Central Bank (ECB) has decided to keep interest rates on hold at 1% and says it expects growth returning to the global economy only in the next year. According to them, economic activity is likely to remain weak this year and the outlook for the future is highly uncertain. Although it looked like the pace of contraction is slowing down, positive growth is likely to return only in 2010.
The Gold story
The Gold market in New York seemed perturbed as it wobbled its way on both the sides through the day. The dollar rose and investor sentiment weakened, leading to the dismal pace at which Gold climbed its way facing resistance at $970/ounce. A little strength in the dollar has shown to weaken the Gold rally, somehow making the metal vulnerable to the currency’s fancy.
As equities rallied, gold climbed too after it opened in New York at $967.50/968.50 an ounce. Falling Oil prices and a rallying dollar bought the metal tumbling. In the latter session of trading, investor demand again carried Gold higher. Profit taking eventually pulled the metal lower as it closed at $959.80/960.80 an ounce.
The news on US jobs situation being better than expected bought Silver under heavy pressure as it ran out of bullish steam. The white metal opened in New York at $14.99/15.02 an ounce and then ticked higher for sometime. Profit taking was the
culprit that got the metal down but Silver recovered for a short time before buyers dumped the metal again.
Several attempts to rally failed and the metal moved sideways for the rest of the day and on light trading finally closed at $14.64/14.67 an ounce.
