Easing of gold imports pushes gold price up

NEW YORK (Bullion Street): In view of the upcoming elections in India, the government of this country may implement an easing of import restrictions on gold. If this happens, it will certainly have a beneficial effect on gold prices. So says Jeff Nichols, precious metals economist and managing director of the American Precious Metals Advisors (APMA).

Nichols pointed out that the import tariff on gold could be reduced by 2% and that the stipulation that 20% of all gold imported into India must also be re-exported could also be removed.

Jeff Nichols said: "The sharp decline in gold imports in 2013 – from around 1,000 tonnes per month at the beginning of the year, to numbers of just 250 to 300 tonnes at the end of the year – had a powerful negative impact on the price of this precious metal on global markets. The consequences of this on the gold price are both physical (with regard to the global supply and demand situation) and psychological (investor sentiment)."

The import restrictions have also led to large-scale smuggling of gold by tourists, traders and couriers through the airports. In addition, smuggling through the borders with Pakistan, Bangladesh and Nepal has also increased sharply.