Gold importers stayed on the sidelines for a third straight week due to policy uncertainty on shipments and supporting premiums.
To keep a lid on record trade deficit, the Reserve Bank of India (RBI) tied gold imports for domestic use to exports, helping cut imports available to the local market by 60 per cent. The government has also raised the import tax twice in 2013 to 8 per cent.
"Banks are confused on documentation and everything, so imports are not happening," said Haresh Soni, chairman of the All India Gems and Jewellery Trade Federation, adding that premiums on London prices were quoted at up to $40 an ounce.
Importers are waiting for clarification from government agencies like the Reserve Bank of India and Directorate General of Foreign Trade for further guidelines on imports, Mr Soni said.
June gold imports fell nearly 81 per cent to 31.5 tonnes from a record 162 tonnes in May, although Finance Minister P Chidambaram said recently that imports again rose in July, without giving details.
India, the world's biggest buyer of the metal, is hoping to contain gold imports well below the 845 tonnes shipped last year, the Finance Minister said.
At 1235 GMT, the actively traded gold for October delivery on the Multi Commodity Exchange (MCX) was down 0.17 per cent at Rs 28,000 per 10 grams. It earlier hit a low of Rs 28,676, a level last seen on April 13.
Silver for September delivery on the MCX fell 0.39 per cent to Rs 41,807 per kg.
Copyright @ Thomson Reuters 2012
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