The RBI announced an easing of gold imports on 21 May 2014.
Only banks could import gold under the 20:80 export rule. But now also star trading houses and premier trading houses can import gold under this 20:80 export rule. This revised guideline has come into force with immediate effect.
Today, the US gold price is $1300/ounce. The total Indian premium was around 20% (import duty of 10% + premium of 10%) a few weeks ago. Today the premium is apparently 82 USD. That's a premium of 6.3%. That means the Indian premium has already started to come down. And it is expected that this premium will come down another 50 USD, which is another 4% lower. Also, it is likely that import tax duty will go back to 6-8% from 10%, which will make premiums go down some more.
With Indian premiums now dropping, this will lead to a higher physical demand. I expect that this higher demand will send gold prices higher in a few weeks from now.
Why do I think this? Just look at the chart above. When the Indian gold premium (red line) goes down, the US gold price (grey line) goes up.
Only banks could import gold under the 20:80 export rule. But now also star trading houses and premier trading houses can import gold under this 20:80 export rule. This revised guideline has come into force with immediate effect.
With Indian premiums now dropping, this will lead to a higher physical demand. I expect that this higher demand will send gold prices higher in a few weeks from now.
Why do I think this? Just look at the chart above. When the Indian gold premium (red line) goes down, the US gold price (grey line) goes up.
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