Rising rupee an opportunity for gold buyers: WGC

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The appreciating rupee has opened up an opportunity for gold buyers in the country, as the increase in global prices of the metal is cushioned by almost six percentage points, said Somasundaram P R, managing director of World Gold Council’s (WGC) Indian operations.
The global gold prices have increased around 12 per cent in dollar terms since the January but rupee has appreciated almost 6 per cent during the period. Therefore, gold price in the Indian market has not risen sharply or the rise has been capped because cheaper rupee has made import cheaper.
“That is a great attraction for people to buy gold,” Somasundaram said.
However, with predictions by some economists that the rupee is going to further appreciate, people may get gold cheaper if international price remains at current levels.

“This is a fantastic opportunity, which is like Indian gold is available at a discount of six per cent. But may be the discount will further go up if Rupee appreciates. People are definitely keen and the first quarter has been good,” he added. He was addressing media while discussing council’s report ‘India’s gold market: evolution and innovation’.

The non-resident Indians has identified the opportunity and their gold purchase in India has seen a growth. The gold price is $1,285 per ounce on Wednesday while in Mumbai standard gold closed at Rs 29,350 per 10 gm.
He added that the market has bounced back from a slow down earlier and the trade sentiments is up and it is expecting the Akshaya Tritiya this year to be good. However, customers are still vary of buying big quantities of gold, for various reasons. Even jewellers Business Standard spoke to said there is increased number of inquiries and orders deliverable on Akshaya Tritiya but largely for small ticket jewellery.
Another year of subdued gold demand
“Linking PAN to gold purchases, uncertainty over the goods and services tax rates for gold and restrictions on cash transactions are expected to affect the gold demand during this year. The demand is expected to be at 650-750 tons during the year, a subdued one for the second consecutive year. Last year saw demand of around 675 ton. While the IMD has said that the monsoon this year would be normal, any effect would be identified only in the fourth quarter of the year,” he added.
The impact of the GST on the segment would depend on the rate to be fixed in the new regime. Various industry associations have put their demand to fix the rate at a lower rate than the existing 12 per cent or to be cumulatively up to 12 per cent. The WGC suggested it should be at 6-7 per cent or there could be different ways to fix it including charging GST on gold only on conversion, among others.

Source: http://www.business-standard.com

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