“There was no gold import in the last two months. Hence, the domestic demand, albeit weak, was met only through existing inventory and recycled gold. But with the stagnation in gold price, scrap sales have declined dramatically in the last few weeks, posing a threat for refineries,” said James Jose, vice-president of the Association of Gold Refineries and Mint, and managing director of Chemmanur Gold Refinery.
Supply through recycling of used gold declined to around 10 tonnes in the second quarter of the current calendar year. In the third quarter, supply through used gold is estimated to be further down, resulting in lower availability of scrap for recycling.
Refineries will have to shift to processing of dore, the cast bar from the first stage of gold purification; it is about 90 per cent gold.
The government liberalised dore (pronounced do-ray) import early this year and this has become more economical than buying pure gold from foreign refineries.
However, procedural hurdles have meant refineries have not shown much interest in importing dore.
A licnece to do so is needed from the directorate general of foreign trade. Refineries will, however, have to shift to doing so, said Jose.
“The government since the beginning of this year has taken several steps to curb gold import, resulting in lower availability of virgin gold. In addition to increasing the import duty to 10 per cent, it mandated a minimum 20 per cent of imported
Starved of gold, Indians may import record volumes of silver
Customs clear part of imported gold
Should you BUY gold on the dip?
SPECIAL: Why investors love gold now
SPECIAL: When gold saved the day for India