Gold price drops to two-week low

A day after the apex bank - Reserve Bank of India (RBI) - eased curbs on gold import and scrapped the 80:20 scheme, the yellow metal's price dropped to an over two-week low at Rs.26,400 per 10 grams here Saturday.

Under the 80:20 scheme, 20 percent of the imported gold had to be exported before getting a new lot. The scheme was put in place in August 2013 to curb gold imports, which was considered a major cause for the widening current account deficit of the country.

"It has been decided by the government of India to withdraw the 20:80 scheme and restrictions placed on import of gold. Accordingly, all instructions issued about the scheme from time to time starting with A.P. (DIR Series) Circular No.25 dated Aug 14, 2013 stand withdrawn with immediate effect," the RBI said in a notification late evening Friday.

"The removal of the 80:20 scheme is a welcome development and one that reflects previous statements from the RBI and the government that gold curbs are meant to be short term. The timing of this development though surprising, will definitely boost confidence in general, and in the jewellery industry, in particular," Somasundaram P.R., managing director, India, World Gold Council said.

Silver also plummeted to Rs.35,380 per kilogram due to poor offtake by industrial units.