Gold buying muted after RBI measure

The central bank yesterday banned gold imports through consignment to moderate demand

Gold buying in India, the world's biggest buyer of the metal, came to a halt on Tuesday, a day after the central bank restricted gold imports on consignment basis and jewellery sellers saw a sharp rise in festival sales. Yesterday, the Reserve Bank of India (RBI) banned gold imports through consignment, and traders awaited for more clarity from the central bank.

Gold and silver imports rose 138 per cent in value terms to $7.5 billion, data from the trade ministry showed, increasing pressure on the current account balance.

"People are squaring off their older consignments, we are not accepting new orders... we will wait and watch until guidelines from RBI," said a dealer with a private bullion importing bank.

The central bank said the measure is aimed at moderating demand for the yellow metal, but banks should meet the genuine needs of gold jewellery exporters.

The most-actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 0.2 per cent lower at Rs 26,795 per 10g, weighed by a stronger rupee.

The rupee, which fell on Tuesday, plays an important role in determining the landed cost of the dollar-quoted yellow metal. Silver for July delivery on the MCX was one per cent lower at Rs 44,670 a kg.