India scraps gold import restrictions

The Reserve Bank of India has just announced on its website the scrapping of restrictions on gold imports, and the withdrawal of the so-called 20:80 rule which forces traders to re-export 20% of all imports.

The import curbs came into force in August 2013, to shore up the tanking rupee and tackle the country's current account deficit which had ballooned to 5.5% of GDP.

The surprise decision – most observers were calling for a tightening – did little for the price of gold in New York, which was last trading down nearly $20 an ounce at $1,178 an ounce, the lowest in more than two weeks.

Although details of the move still has to be disclosed it's likely that the precipitous fall in the price of oil – India's top import ahead of gold – played a role.

Indian gold imports have surged recently, but the decline in crude price will soften the impact should Indian traders continue to ramp up purchases.

Image by Eric Kim