India curbs plain gold jewellery imports after traders avoided tax on around 4 tonnes shipments
Business
Precious metal in early Thursday trading nears one-month high
MUMBAI/BENGALURU (Reuters) – India on Wednesday restricted imports on plain gold jewellery, as the world's second-largest consumer of the precious metal tries to plug loopholes in its trade policy.
Import of articles of gold have been put under the restriction category from the free category, a government notification said, adding that import under the India-United Arab Emirates Comprehensive Economic Partnership Agreement would be allowed without any license.
The Ministry of Commerce and Industry did not immediately respond to a request for comment.
The move comes as importers over the last few months have been using a policy flaw to source plain gold jewellery from Indonesia without paying any import taxes.
"Indonesia was never a gold jewellery supplier to India, but in the last few months, bullion dealers imported 3-4 tonnes from
Indonesia without paying any import taxes," said a Mumbai-based dealer with a private bullion importing bank.
India levies a 15 per cent tax on gold imports.
"Many dealers got to know about the loophole, and they were also trying to source from Indonesia. The policy change has closed that loophole," he said.
GOLD NEAR ONE-MONTH HIGH
Gold prices advanced to a near one-month high on Thursday supported by a softer US dollar, after US inflation data raised hopes that the Federal Reserve would soon stop tightening its monetary policy.
Spot gold was up 0.1pc to $1,959.79 per ounce by 0241 GMT, hitting its highest since June 16. US gold futures ticked up 0.1pc to $1,964.30.
US consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside, but probably not fast enough to discourage the Fed from resuming raising interest rates later this month.
Therefore, a lot of focus remains on the central bank's next rate-setting meeting, which could dictate near-term gold prices, said Brian Lan of Singapore dealer GoldSilver Central.
Recent hawkish comments from policymakers have weighed on gold, with bullion down more than $100 since its May highs.
Higher interest rates increase the opportunity cost of holding non-yielding bullion, even as it is seen as a safe investment during times of political and financial uncertainties.
"(Therefore,) while gold could go higher closer to the $2,000 mark, chances of prices coming down is more likely this quarter, and thus $1,800 remains a possibility," Lan further said, adding the Fed could still strike a "cautious tone".
In the broader financial market, Asian shares and bonds also rallied after US inflation stoked speculation the end of the post-pandemic tightening cycle is in sight.
On investor radar now are US initial jobless claims and the Producer Price Index report, due later in the day.
Among other precious metals, spot silver rose 0.3pc to $24.2163 per ounce and palladium advanced 0.7pc to $1,292.19.
Platinum gained 0.8pc to $954.26, after rising 3pc in the previous session.
