Import restrictions and the rival appeal of equities have put a damper on India’s gold market, traditionally the world’s biggest. As festival season gets under way and Indians indulge their craving for the yellow metal, many are wondering when New Delhi and the Reserve Bank of India will begin rolling back their efforts to keep the market in check.
Officials are particularly concerned about the effect of gold imports on India’s troublesome current account deficit. One way round that problem would be to encourage more recycling of gold already in India. It could also be an enticing business proposition. Read more
South Korea’s stock exchange opened a gold trading platform on Monday with the hope of boosting transparency of gold trades and rooting out shady deals used for tax evasion.
Eight brokerages and 49 dealers were allowed to participate in the market. They will get tax benefits to encourage their active participation and they will be exempted from trading commissions temporarily until March 2015. Importers of gold to be traded on the exchange will also be exempted from tariffs to increase supply. Read more
India’s policy makers clamped down on gold imports last year, repeatedly hiking duties and introducing quantitative restrictions which squeezed supplies and pumped up premiums in the local market.
As a result China knocked India off the top spot to become the world’s biggest gold market in 2013, according to research by the World Gold Council (and as beyondbrics predicted a while before). What’s surprising is that demand for the yellow metal is still growing rapidly in India, where love for gold is deeply ingrained in culture and religion. Read more
Restrictions on India’s gold imports will be reviewed by the end of March if concerns over the country’s external balances ease up, India’s finance minister, Palaniappan Chidambaram, said on Monday.
As the second largest gold importer after China, any shift in India’s import policies could have an influence on world markets. However, much depends on how policymakers judge their progress in bringing down the current account deficit. Read more
As India’s current account deficit ballooned to unsustainable levels last year, the government slammed the breaks on gold imports with duty hikes and new rules on re-export of the yellow metal. The result was that the jewellery industry hit a standstill.
However, according to Pakistani authorities, India’s official inflows of gold have simply shifted to unofficial channels. Time for action. Read more
India’s external balances have been a focal point this year as the country’s economic woes have centred around the depreciation of the rupee.
So policy makers will be pleased to see India’s trade deficit narrowing yet again. The gap was squeezed to $9.2bn in November from $17.2bn in the same period a year earlier, according to new data from the Ministry of Commerce and Industry. Good news? Read more
When the Reserve Bank of India put out its latest statement on the nation’s current account deficit on Monday it looked like good news.
The gap narrowed to $5.2bn, or 1.2 per cent of GDP, in the three months to September from $21.0bn, or 5 per cent of GDP, in the same period a year earlier. But are these numbers simply a mirage? Read more
Rumours have been circulating for a while that capitalist bankers may be cooking up ways of helping cash-strapped, socialist Venezuela. Now details are emerging of how the Bolivarian Revolution is paying generous fees to get its hands on hard currency, without actually running up any new debt, or running down its reportedly-depleted foreign exchange reserves. Read more
In the fourth part of our series on gold in India, beyondbrics asks why sales of the precious metal were so subdued before this month’s Diwali festival – usually a peak season.
See also part one, jewellers in a desperate spot, part two, gold loans on the up, part three, the story in charts, and from FT Analysis, India: Part of the fabric. Read more
In the third part of the beyondbrics series on India and gold, we tell the story of the country’s obsession in seven charts.
[See also the FT analysis: India: Part of the fabric; beyondbrics series part 1, the jewellers in a desperate spot; and part 2, the growth in gold loans.] Read more
In the second part of a beyondbrics series on India and gold, we look at the surge in gold loans – a market that highlights the country’s obession with the metal, and serves to reinforce demand.
See part one: India’s jewellers in a desperate spot. Coming on Friday: India and gold in charts. Read more
What can India do about its gold habit? In the first part of a beyondbrics series, to accompany the FT’s Analysis of India and gold, we look at the impact of recent measures to curb the country’s gold appetite on the jewellery industry. Read more
India’s mandarins aren’t quite done tinkering with the gold market.
This week, the government hiked customs duty on gold and jewellery from 10 per cent to 15 per cent, a move aimed both at reducing imports and protecting domestic goldsmiths ahead of the festival season. Read more
By Puran Singh and Nupur Pavan Bang of the Indian School of Business
“Getting married this year would be very costly for me. With gold prices at an all-time high, jewellery shopping will literally wipe out all my savings. My parents will insist that I buy at least 50 grammes of gold jewellery for my future wife. It does not make sense right now at such high prices.” So says a friend, bracing himself to tell his fiancée their wedding must be postponed. Read more
That'll be 20% please
The Reserve Bank of India (RBI) has put new restrictions in place to limit gold imports, in an attempt to control the country’s unsustainable current account deficit and ease pressures on the depreciating rupee.
The central bank announced late on Monday that 20 per cent of imported gold must be set aside for export with the remainder going to the jewellery industry. Read more
South Korea has announced it plans to set up a gold exchange in 2014 to much fanfare – but analysts warned that it might be poorly timed, given weak demand for bullion amid the global economic slowdown.
The country’s financial watchdog said on Monday that spot gold will be traded on its main bourse from early next year as the government is keen to boost transparency of gold trades and root out shady deals used for tax evasion. Read more
It’s becoming a familiar phrase: The Indian rupee has hit yet another record low, dropping below Rs61 to the dollar on Monday.
There are a few things the government could to do to stem the fall, but with an industry survey suggesting further depreciation of the rupee, the records could keep on coming. Read more
Gold mining companies are fast-reducing their drilling activities in Africa, pushing down the exploration levels on the resource-rich continent to a 17 month low.
It’s bad news for many Africa countries – gold mining makes a big contribution to GDP and foreign currency earnings. Read more
For the second time this year, the Indian government has hiked duties on gold imports.
As Indian buyers are famously price insensitive when it comes to their favourite yellow metal, this may not be the most effective way to stem inflows of gold and limiting the current account deficit. But at least it will make a bit of money for a cash-strapped administration and help with the country’s considerable fiscal shortfall. Read more
The sudden blow-up of the Hong Kong Mercantile Exchange (HKMEx) not only represents the collapse of a commercial proposition. It is also a warning call to Hong Kong’s ambition to develop itself as a commodities trading centre. Read more