Gold traders in India,the world’s biggest buyer of the metal,struggled to get supplies from importing agencies,to cover a small rise in demand triggered by a fall in prices to their lowest level in a month.
In a bid to contain the record current account gap,the government banned consignment imports,making it difficult for smaller jewellers with lower working capital to source supplies. The government also raised the import duty to 8 percent.
“It’s very difficult to get supplies… there is a little demand,” said Haresh Acharya,head of bullion desk at Parker Bullion,which has reduced purchases to 200 kilograms per week from a similar quantity per day before the curbs were imposed.
Premiums stayed steady at up to $20 per ounce on London prices,traders said.
Most of the supplies are being met by privately held trading houses and state-run agencies such as MMTC,State Trading Corp,and PEC Ltd through imports in April and early May as banks await guidelines from the central bank on outright cash purchases.
The actively traded gold for August delivery on the Multi Commodity Exchange (MCX) was 0.96 percent lower at 25,884 Indian rupees ($430) per 10 grams,after hitting a low of 25,856 rupees,not far from the contract low of 25,465 rupees hit in mid-April.
Gold prices have also been hit by the firmness in the rupee,which plays an important role in determining the landed cost of the dollar-quoted yellow metal.
Silver for July delivery on the MCX was 1.01 percent lower at 39,167 rupees per kilogram.