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The Indian government has raised the import duty on gold dore bars to 5% from 2% in addition to the import tariff hike from 4% to 6% for refined gold in a bid to reduce the current account deficit.

26 Jan 2013

Commodity Online
Given the market had anticipated additional measures, and demand was impacted last year providing a low base year Barclays expects India gold consumption to fall by only a modest percentage in 2013, particularly as concerns over smuggling have been raised should import duties by raised further. 

The Indian government has raised the import duty on gold dore bars to 5% from 2% in addition to the import tariff hike from 4% to 6% for refined gold in a bid to reduce the current account deficit.

Local dealers have said importers had stocked up ahead of the anticipated hike, thus inventory levels are plentiful ahead of the wedding-related demand.

However, The Bombay Bullion Association has said demand will not be impacted while some dealers have stated demand could fall by 25% this year, the Bank said in a report.

Gold ETP flows continue to trickle lower and are down by 19.5 tonnes for the year to date while buying in China remains strong ahead of the Lunar new year. However, buying in China is not sufficient to offset the soft demand in India.

Prices have eased across the complex with gold and silver suffering the most downside pressure while the PGMs have held up well.


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