Gold prices likely to go up in near future
The Reserve Bank of India (RBI) has set rigid conditions before the importers concerning the policies for importing gold in the country. The import of gold is now squeezed so as to improve the wobbly Current Account Deficit (CAD) situation and make gold obtainable to exporters. These decisions are likely to increase gold prices in near future.
According to the decision made by RBI, all banks and authorized agencies need to provide 20% of the imported gold to the exporters. The importers will further keep 20% of the shipment in the customs bonded warehouses. The imported gold has to be made available for domestic use only to those entities that are having jewelry business or are gold dealers. The fresh import of gold will be done only after the 75% of gold in the customs bond warehouse are being exported.
Traders and jewelers expect gold price rise in the domestic market just round the corner because of the restricted imports.
The pressure is now built on the exporters as they need to export about 20% of the imported gold in the market. So in order to fulfill the target the gold will be exported at any price. In case exporters tend to face loss, they will recuperate it from the domestic sales prices by increasing them.
This will help improve export of gold from the country, as due to lack of sufficient material the exports were not able to meet the fixed target from past two months and were also in a declining stage.