Rise in duty and large downward correction in price leads to massive fall at Ahmedabad air cargo complex.
Going by the import figures of Ahmedabad air cargo complex for the month of June, the central government seems to have succeeded in controlling gold import. Following the hike in import duty on gold to 8%, coupled with high volatility in prices, import of the precious metal in Gujarat nosedived from its two-year high of 37.61 tonnes in May to just 3.73 tonnes in June.
That translates into a 90% month-on-month fall. The air cargo performance report of the cargo complex at Ahmedabad airport reveals gold import during June was at a one-year low. According to director of GSEC Ltd, Samir Mankad, this is only the beginning.
“Gold imports are likely to be brought down further due to statutory changes and higher duties. We see a deep decline in the future. Only once the crash in gold prices bottoms out, can there be a brief lift in imports,” he said. GSEC manages the Ahmedabad air cargo complex.
In the first week of June, gold was priced around Rs27,500 per 10 grams, which had crashed by Rs1,800 by the end of the month. In the last week of the month, its price in the city corrected downwards by more than 6% to Rs25,700 per 10 grams.
Beginning in June, due to the rain and off-season for weddings, gold import is usually low till the end of August each year, said bullion trader, Girish Choksi.
“However, this June, the import was much lower than the average seen during the month in previous years. Owing to such a high increase in import duty, demand for gold had to go down,” he explained.
Meanwhile, retailers and jewellers from the city had expected this. “The government wanted this and not they have got it. It only due to the commitments made by certain traders that gold import even reached 3 tonnes during the month. Else, it would have been even lower,” said director of AB Jewels, Manoj Soni.
Speaking about demand for gold in retail, Soni said that customers are expecting further correction in gold price before they buy.
“There is a certain class, which usually invests in gold when the price crashes.
They are now awaiting the right time to make their purchase. Hence, even investors are yet to enter the market, despite the 6-7% correction in gold price during last month,” he said. Choksi added that the low demand for gold is expected to continue for two more months. “I am not expecting gold demand to rise before end of August. By then, the prices are likely to stabilise at the current level, and the festive season will begin at the time as well,” he said.
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