Gold prices in India have been declining in July tracking weak global cues. Investors seemed to have turned towards the US dollar on the possibility of another steep policy rate hike in the upcoming review meeting later this month.
Prices of the yellow metal in international markets have declined by around USD 100 per ounce to USD 1,700 so far in July, data showed. In India, the prices declined by around Rs 1,800-2,000 towards Rs 50,000 per 10 gm during the same period.
“Gold prices extended downside on stronger dollar and expectations that US Fed will go for aggressive rate hikes in upcoming meeting to tackle record inflation,” said Tapan Patel, Senior Analyst at brokerage house HDFC Securities.
It is important to note that India has raised the import duty on gold effective July 1. This too may have cooled demand for the commodity.
The Central government had raised the import duty on gold from 10.75 per cent to 15.0 per cent. India is the second-largest consumer of gold, and it fulfils a major portion of its demand through imports.
The upward revision in the import duty was seen as a measure to disincentivize imports amidst the country’s widening trade deficit.
The Ministry of Finance in its latest Monthly Economic Review report said that a sudden and sharp surge in gold imports amid wedding season, as many weddings were postponed to 2022 from 2021 due to pandemic-induced restrictions, is also exerting pressure on the trade deficit.
India’s trade deficit widened to USD 45.18 billion in April-June 2022 period as compared to USD 5.61 billion recorded in the corresponding period of last year, the latest data showed.
(Inputs from ANI)