Significant back-to-back losses in the last four weeks in the back-drop of subdued trend in the international Gold prices and some cheer factor for the jewellery makers back home have pulled down Gold prices to 10-month lows.

The Indian government recently eased the import norms for Gold by allowing more players – like trading houses, co-operative banks and other nominated agencies by the Director General of Foreign Trade (DGFT) to import Gold under the 20:80 scheme.

This is turn, has led to significant drop in premium which the Indian Gold commanded viz-a-viz the NYMEX Gold contract. For most part of the year, the MCX Gold futures traded at a superior 4 per cent premium, which at times jumped over 5 per cent, when compared to the NYMEX counter-part.

However, post the recent ruling, the premium for the MCX Gold future has eased-out to less than 2 per cent – a clear fall of 2 per cent. This coupled with a 7 per cent fall in Gold futures in the last four trading weeks, as brought down Gold prices to 10-month lows – much to the relief of Indian Gold buyers.

Gold
As per official data available from the World Gold Council – India’s import of Gold in the first quarter of this calendar year has dropped sharply by 26 per cent to 190.3 tonnes – mainly on account of high import duty and supply curbs.

Total Gold demand in the first quarter of 2014 was more or less flat at 1,074 tonnes as against 1,077 tonnes a year ago. Indian jewellery demand declined by 9 per cent to 159.5 tonnes.

However, going ahead the demand from India is likely to pick-up with the new policy in place. Also positive data on trade deficit front will give the new Modi-government enough space to lift some more curbs on the Gold imports. For the records, trade deficit in India for Q1CY14 fell to a record four-year low at $ 1.2 billion compared to $ 4.2 billion in CY13. The sharp fall was largely attributed to lower gold imports.

THE ROAD AHEAD – How much more further can Gold Prices in India fall is anybody’s guess. For the moment, Gold buyers simply have a reason to smile. Traditionally, Gold prices in India remain subdued during the monsoon period, and then start to climb towards the end of August – ahead of Ganesh festival, and prices get firmer as the festival of Diwali nears.

TECHNICALLY – the daily charts indicate, the Gold prices India may drop to Rs 25,000-odd levels somewhere in June-July period, post which the next course of action will be clear.