Many analysts were surprised at the speed with which India bought the IMF gold. However, they believe that it is a very smart move as by buying IMF gold, New Delhi is shoring up its bullion reserves and slowly trying to hedge its bets on the US dollar which has been losing value against other currencies.
Gold hits Rs.11,360, thanks to rate cuts by US Fed Bank and a languishing dollar.
This was the second consecutive yearly outflow from such funds.
The precious metal is understood to have arrived in large quantities through official channels, including direct import by export-oriented units, in the last week of March.
In a draft paper prepared by the RBI seeking public opinion until January 18, the banking regulator has proposed a financial instrument linked to gold to curb the demand of its physical holding.
RBI capped the gold lease period at 90 days under the direct import route.
Banks in talks with temple trusts to push gold scheme
Silver also rose 0.8 per cent to $16.63 an ounce.
Gold imports rose in December to 25 tonnes, higher than 19 tonnes in the previous month, mainly on account of wrong interpretation of the RBI's 80:20 scheme, sources said.
Justifying the hike in customs duty on gold in the Budget, Finance Minister Pranab Mukherjee today said its huge imports cause strain on the balance of payment and affect exchange rate, but it does not have any direct bearing on the forex reserve.
The decision was taken in view of significant rise in imports of gold in recent years putting pressure on current account deficit.
Traders said a weakening trend in the precious metals overseas after the Federal Reserve pressed on with cuts to stimulus amid signs of a recovery in the US, reducing demand for the safe haven, mainly put pressure on the gold prices in New Delhi.
Silver was also up by 1.63 per cent to $15.92 an ounce.
Tracking a weak trend overseas and low demand from domestic jewellers and retailers, gold prices plunged by Rs 200 to Rs 26,350 per ten gram in New Delhi on Monday.
Silver, platinum and palladium all declined.
These companies may recall loans in extreme cases; loan-to-value ratio stands at 60% but scrap value at 75%.
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The Reserve Bank partly eased restrictions on import of gold dore by allowing refineries to import 15 per cent of their gross annual requirement.
The RBI has issued guidelines and the government has notified it.
Gold drifted lower by Rs 200 to trade at one-week low of Rs 31,050 per ten grams.
Deposit certificates will also be exempt from capital gains tax.
Gold prices plunged to over ten months low by losing Rs 505 to Rs 29,470 per ten gram in the national capital on Thursday on frantic selling by stockists amid restricted buying, driven by a steep fall in overseas markets.
Gold is often favoured as a hedge against economic and financial uncertainty
Conversion into jewellery during redemption would entail 15-20% wastage and making charges, rendering the scheme inefficient
The foreign exchange reserves moved up $326 million to $76.077 billion for the week ended April 18, 2003.
CAD touched a historic high of $88 billion in 2012-13.
In the previous reporting week, the reserves had surged by $954.6 million to $294.36 billion.
Finance Minister must be hoping that Indians get over gold-addiction.
The government on Monday slashed import tariff value on gold and silver to $408 per 10 grams and $617 per kg respectively, in view of weakness in bullion prices globally.
India's foreign exchange reserves shot up to an all-time high of $339.99 billion.
In August 2014, imports stood at $ 2.06 billion. Higher imports will have adverse bearing on India's current account deficit (CAD).
Sales of gold coins and bars should be curbed after reaching around 300 tonnes
To check rising current account deficit, the government has raised import duties and the Reserve Bank of India had imposed curbs on import of the yellow metal and also laid down various pre-conditions for inward shipments of the precious metal.
Gold prices staged a smart rebound to surpass the psychologically important Rs 28,000 milestone.
The Reserve Bank, in Annual Monetary Policy Statement, has also asked banks to set up internal exposure limits for those non-banking financial companies who have gold loans portfolio of more than 50 per cent of the total financial assets.
India imports gold worth $26 bn in Apr-Dec period.
Spot gold rose $8.32 an ounce to $1,474.56 by 0624 GMT, well below a lifetime high around $1,920 an ounce hit in September 2011.
Gold prices fell to a 5-year low of less than $1,100/ounce.
The government on Monday reduced the import tariff value of gold to $458 per 10 grams due to fall in its global prices.
India's foreign exchange reserves declined by $215 million at $81.905 billion during the week ended June 27, 2003. \n\n\n\n
It's affecting deposits, too.
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