Spot gold price tumbled below the psychological $1,300-mark on Wednesday for the first time in more than a month after the gold’s biggest consumer, India, hiked import duty on gold and silver jewellery by another 5 per cent on Tuesday in a bid to safeguard local jewellery-makers.
Also impacting investor sentiment is the looming decision of an ongoing US Federal Reserve meeting, which analysts agree will announce a $10 billion tapering off in America’s $85bn/month quantitative easing programme.
India yesterday hiked the import duty on gold and silver jewellery to 15 per cent from the earlier 10 per cent “to protect the interests of small artisans.”
According to the official statement, authorities said an import duty differential between finished jewellery and solid metal is needed to protect millions of Indian artisans who depend on the labour-intensive industry.
Beginning this year, India has gradually raised the import duty on gold and silver in stages, but none of the previous hikes was as sharp as this time’s 5 per cent increase.
“Jewellery making is a labour-intensive industry,” the official release said while explaining the decision. In the absence a duty differential, it noted, “there is an apprehension that Indian jewellery makers would not be able to compete with cheaper imports, particularly when majority of the imported jewellery is machine-made as compared to handmade jewellery in India.”
It should be noted that this latest increase impacts import of gold jewellery and not the base metal, the duty on which remains 10 per cent.-Emirates24/7