Gold Loses Some Glitter, Smuggling On The Rise

Gold demand is slumping in the Indian sub-continent with traders in the country and Pakistan reporting little business, dealers said yesterday.

Dealers in Mumbai said demand for gold remained poor and smuggling was further depressing prices.

Arrivals of smuggled gold by sea were high last week but are expected to slow down once monsoon start, said Babubhai Jain, a bullion dealer. The monsoon is expected to hit Mumbai this week. Gold is smuggled into the country by sea on small boats plying between India and the Gulf.

In Pakistan, gold is expected to move in a narrow band after the government ruled out a devaluation of its currency in last weeks budget for 1997-98.

 

Dealers in the Gulf trading hub of Dubai said expatriate Indians returning home for summer holidays were expected to buy gold and jewellery as gifts to take back home.

Dubai feeds gold demand from India, the worlds largest consumer of the metal, and its neighbour Pakistan. The two supply a huge number of expatriate workers to the Gulf.

In Mumbai, gold prices fell by Rs 40 per 10 grams to Rs 4,640 in the week to Monday. Dealers said premiums on acquiring special import licences for importing gold had also come down to 10 per cent from around 14 per cent a month ago, indicating slack demand for imports.

Since domestic prices are low, theres not much incentive for importing gold, said a bullion dealer. Dealers said an international jewellery fair organised in the last week of June should cheer the bullion traders, though it was meant to boost exports.

As one of the worlds fastest growing jewellery centres, India is becoming an important destination on the itineraries of buyers worldwide, said Praveen Pandya, chairman of the Gem and Jewellery Export Promotion Council, sponsors of the fair.