Indian gold smuggling soars

Gold has not surprisingly found a back door into India, despite import restrictions on the yellow metal that were only recently lifted.

Numbers released Friday from the Trade Ministry of India indicated that higher tariffs and import restrictions resulted in more black-market gold being brought into India. As reported by Kitco, the number of gold seizures rose to 3,412 cases in the first 10 months of fiscal 2015, compared to 2,450 cases during the 2014 fiscal year. That equates to around $150 million in smuggled gold, compared to $110 million for the previous period, Kitco said.

The smuggling was most certainly done to circumvent import curbs that 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.

Last November however, the Reserve Bank of India scrapped the restrictions on gold imports, and the withdrawal of the so-called 20:80 rule which forces traders to re-export 20% of all imports.

Gold finished the day on Friday up $11.43, at $1,182.40 an ounce, with the gains largely due to a decline in the U.S. dollar following reports of weaker-than-forecast domestic retail sales for January. Gold’s gains followed a stellar day for the precious metal on Wednesday, after the release of the latest Federal Open Market Committee (FOMC) statement which cut the amount of interest rate increases the FOMC expects to see this year. The news sent April Comex gold futures up $24.50 to $1,172.70 an ounce.