India tightens gold import rules further
India continues to tighten its grip on the country's gold trade, announcing Sunday a hike in the import tariff value of gold to $459 per 10 grams.
Last month, the tariff value of gold was pegged at $440 per 10 grams. The silver tariff value was cut to $737 per kilogram from $761 per kilogram.
The Times of India reports the tariff value is the base price used to calculate customs duty on gold imports. The system is designed to prevent under-invoicing.
Gold is India's number two import item in terms of value after crude oil and the government has been trying to curb imports to reduce the country's chronic balance of payments problem.
India hiked the import tax from 2% to 6% over the past year, banned traders from importing gold on margin and may announce further regulations this month, including barring state-run entities from importing gold.
The Wall Street Journals reports India "will also sell from next month government bonds that will adjust returns based on the rate of inflation, a move aimed in part at weaning away small investors from buying gold as a hedge against high inflation."
Asian gold demand from April to June of this year will reach an all-time high, according to the World Gold Council, with Indian demand jumping 200% from a year ago.
Buying of gold as part of weddings ceremonies and during festivals such as Akshaya Tritiya which took place on May 13 this year, drive consumption of the precious metal on the sub-continent.
Consumers across the region have viewed the recent price collapse and ETF outflows as a great buying opportunity.
According to some estimates, Indian households are hoarding close to 20,000 tonnes of gold worth some $1 trillion, representing 50% of the country's GDP.
After hitting a two-week high on Friday above the psychologically important $1,400 level in New York, Asian trade over the weekend saw the metals pull back again to $1,388 an ounce.