Feb 1
India, the world?s biggest bullion consumer, has raised the base import price for gold by 5.7% to $556 per 10 gm and that of silver by nearly 12% to $1,067 per kg, a government statement said on Wednesday.
Base price is the rate at which imports are taxed, irrespective of the purchase price, to prevent under-invoicing. The move, which could hit annual Indian demand of around 800-900 tonnes of gold, is seen as a measure to raise state revenues as the government struggles to meet its fiscal deficit target due to increasing outlays, including subsidies for fuel and food.
?There is a definite impact on demand due to rise in tax,? said Harshad Ajmera, proprietor of JJ Gold House.
Last month, India hiked its gold import duty by 90% and doubled the tax on silver, sending futures prices higher and hitting shares of
jewellers.
Snapping its four-day rally, gold prices fell by R70 to R28,620 per 10 gm in the bullion market on Wednesday, while silver shed R700 to R55,800 on fall in demand at prevailing higher levels, despite a firming global trend.
Silver coins followed suit and tumbled by R3,000 to R65,000 for buying and R66,000 for selling of 100 pieces on sluggish demand.
Traders said both precious metals remained under pressure even as a better trend was seen in the overseas markets, which normally sets the price trend here, due to lack of buying support from speculators and reduced offtake by industrial units.
In Singapore, gold gained $4.70 to $1,741.40 an ounce, while silver rose by 1.18% to $33.52 an ounce.
On the domestic front, gold of 99.9 and 99.5% purity fell by R70 each to R28,620 and R28,480 per 10 gm, respectively. The metal had gained R920 in the last four trading trades. Sovereigns remained steady at R23,400 per piece of 8 gm on restricted buying. Silver ready dropped by R700 to R55,800 per kg and weekly-based delivery lost R775 to R56,410 per kg.