The Big A: Retailers say they do not beleive the demand upturn created by the India situation to last forever. The move was implemented to curb consumption of Gold in India, help reduce the country’s import bills and the current account balance.
A 1-gm piece of Gold sold in Dubai would be cheaper by anywhere up to 20% compared to which state a similar purchase is taking place in India . India’s Gold and jewelery traders have petitioned the Indian Government to repeal the tighter rules. The restrictions will remain as long as the curbs are in place and there is supply shortage of physical Gold for jewelers in India .
Either way, UAE Gold retailers are doing well as many have an extensive presence in India . The price gap between UAE and India Gold prices will remain even if import duties are reduced, the prospects for the Rupee remaining weak continue.
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations.
Information and opinions contained on this page are for educational purposes only and do not constitute trading recommendations. Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors.
What has created this situation have been government requirements that domestic Gold importers in India must make sure they export 20% of their consignments.
This percentage includes the import duty, the premium on Gold delivery plus the VAT (value added tax), which varies within each state in India . If the Rupee becomes weaker after the elections, it will make buying in Dubai and selling in India even more attractive for individuals. You should be aware of all the risks associated with foreign exchange and futures trading, and seek advice from an independent financial advisor if you have any doubts.
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