India’s current account deficit hit a record high of 6.7 per cent in the December quarter. The government has blamed rising gold imports for the high current account deficit. India is the world’s biggest buyer of bullion and gold imports are the second biggest import item (in value terms) after crude. Rising current account deficit has pressured the rupee, which hit a record low of 59.98 recently.%% Globally, gold prices have been falling, but the sharp depreciation in the rupee has supported gold prices domestically. Haresh Soni, Chairman, GJF however, said that the gold demand is very less despite the fall in prices last week as most traders had advanced purchases in April and May. Over the past month, the Reserve Bank has put out several guidelines to dissuade gold imports. It has mandated that all imports of gold for domestic consumption can be made only with 100 percent cash margin to curb the supply side to protect the current account deficit. The government, too, has been taking steps to bring down import of gold. Earlier this month, the government increased import duty on gold by a third to 8 per cent. Also, Anil Ambani promoted firm Reliance Capital had suspended sale of physical gold and all gold related investment products in a bid to support the government’s efforts to curb gold import.%% Gold imports accounted for roughly 75 per cent of the CAD in FY12. Despite the government increasing the import duty on gold from 4 per cent to 6 per cent in January, 2013 there has been no let up in imports; on the contrary, the sharp drop in gold prices in April pushed up domestic demand with imports in April and May coming in at close to 300 tonnes, almost 35 per cent of the total imports seen in 2012. That resulted in the trade deficit in April and May ballooning to $17.8 billion and $20.1 billion, respectively. In early June, the government upped the duty from 6 per cent to 8 per cent. Policymakers have taken several steps this month to limit gold imports including raising import duty on gold to 8 per cent, raising the cash margin for imports 100 per cent and prohibiting any kind of credit for imports. Trade associations, however, fear that further measures may be taken. %%

Amidst this scenario, India's biggest jewellers' association, All India Gems and Jewellery Trade Federation (GJF) asked members to stop selling gold bars and coins, about 35 per cent of their business, adding its weight to government efforts to cut gold imports and curtail a distension current account deficit. “As a responsible trade body, we have requested our retailers not to sell gold coins or bars. We need to help the government to solve the CAD (current account deficit) problem. We have decided to take a proactive step to control the current account deficit situation. We have requested retailers to stop selling gold bars and coins for temporary period so that imports reduce," informed, Haresh Soni. This call by GJF, which represents about 90 per cent of jewellers, came just days after financial services company Reliance Capital halted sales of its gold-backed funds. It is believed that the total sale of gold bars and coins were about 35 per cent of the total imports last year. If sale of these items are controlled, gold imports can be reduced by 10 to 15 per cent this year. The appeal is also aimed at easing the shortage faced by jewellers that seems to have emerged in the local market. This is reflected in the increased premiums sought by bullion traders which have risen to $5.5 - $6 / ounce compared to the historical average of $1.5-$2/ounce. Investment demand for gold is estimated to account for about 35 per cent of India's annual gold consumption of close to 860 tonnes. Haresh Soni said that the bullion demand may drop about 20 per cent because of curbs on sales.%% GJF has membership of about 42,000 across India and they have responded positively to this call despite their concerns about the survival of the jewellery industry. India, the world's largest gold consumer, imported 860 tonnes of gold in 2012 calendar year. “While there’s no compulsion, we are certain our members will comply with this request given the concern over the widening CAD,” said Nitin Kadam, Regional Chairman-Mumbai, GJF. “We are supporting the Federation’s call. We are going to reduce sale of gold coins and bars. Instead we will focus on lower carat jewellery and value added products,” said Mehul Choksi, Managing Director, Gitanjali Gems. "We are going to reduce sale of gold coins and bars, instead we will focus on lower carat jewellery and value added products." Haresh Soni said that the Federation will review the decision to stop sale of gold coins and bars after assessing the situation of import of the yellow metal and rupee value against US dollar. The jewellers move comes close on the heels of Reliance Capital suspending gold sales across all its businesses. "Demand in India is price inelastic, the fundamental reasons for gold demand in India cannot be addressed through supply restrictions," said Somasundaram PR, Managing Director for India at the WGC.%% If jewellers decide to abide by the appeal made by GJF, the sales of bar and coins which have dropped by about 50 per cent to 60 per cent in June as per traders in the Bombay Bullion Association is likely to come down further. Most banks have also gradually stopped selling gold coins after the RBI restricted imports of gold on consignment basis in early May. However, not everyone expects the sale of gold coins and bars to fall significantly as buyers may shift to the black market. While the majority of India's gold imports are for consumption via jewellery, the rise in investment demand in the form of bars and coins has added to the import pressure. %%

Between 2010 and 2012, India has, on average, imported 345 tonnes of gold for investment purposes. GJF believes that even if 10 per cent of the current stock of gold holdings is channelled back into the market through schemes such as the gold deposit schemes, India may not need to import gold for next 3-4 years. Based on this view, the trade body wants RBI to further encourage gold deposit schemes to monetise the stock of idle gold in the country. It also suggested that ETFs and gold traded funds should be allowed to loan their idle gold stocks to nominated banks and channelising agencies. “India's gold retailers have traditionally followed a practice of holding a lot of inventory," said Espirito Santo Securities' analyst Nitin Mathur in Mumbai."They benefited when the gold prices were rising but prices have corrected so much, the risk is now that the gold in their inventory is worth less than what they bought it for."%% Amid this situation, gold prices failed to hold Rs 26,000-level by falling Rs 271 to Rs 25,865 per ten grams in futures trade recently as market players relieved of their exposures, even yellow metal in international market recovered marginally after hitting near 3-year low."Falling gold prices, RBI policy and impositions of high taxes are primary reasons of fall in gems and jewellery stocks," said AK Prabhakar, Senior Vice President Equity Research, Anand Rathi Financial Services. The government has raised import duties for gold twice since January, doubling it to 8 per cent, but the central bank moves to tackle supply, such as making jewellers pay for gold up front, have had more impact. In the last 25 year gold prices have been rising in India due to weakness in rupee which was around 10 in 1982 and today it is around 60 compared to the US dollar. Going forward, gold as an asset class could give negative returns, added Prabhakar. The curbs on gold, part of the efforts to control the current account deficit, have added to the costs. The trade is also stressed by aggressive customers who, unaware of the taxes, import duties or the rupee's depreciation, demand cheaper gold.%% Several jewellers, including Gitanjali, Orra, C Krishnaiah Chetty and Popley & Sons, said that they plan to hard sell diamond jewellery and innovative products that will ensure value addition of 25-30 per cent. Although this may hurt sales to an extent, the change in strategy is attractive as the margins in gold are much lower - about 6-14 per cent, the jewellers said. "The drop in international prices is confusing consumers. They are asking us why jewellers are not offering them gold at a lower price. They are not taking into consideration the falling rupee which is making gold costlier here," said Rajiv Popley, Director of Popley & Sons. "As a jeweller we do not want to lose customers. So we have decided to push diamond jewellery with less gold content and also offering entry level products which have low labour charge. So we are reorienting business strategy for the time being to survive," said Rajiv Popley. Gold has not only become expensive in the country due to rupee weakening. There are other reasons too. "The import duty of 8 per cent, VAT of 1 per cent and banking charge of 1 per cent has made the yellow metal costlier in the domestic market. Moreover, banks are charging premium which have made gold expensive. So jewellers are looking at different avenues for survival. Sales have fallen after we requested our jewelers to stop selling coins and bars,” said Haresh Soni. “There would be about 15 percent fall in gold consumption this year.” %%

The plunge in gold to an almost three-year low has failed to lure shoppers in India, the world’s largest consumer, as state curbs and a decline in the rupee to a record bolster the costs of imported metal. Inbound shipments may tumble 52 per cent to 150 metric tons in the three months starting July 1 from a quarter earlier as buyers keep away from stores, said, Bachhraj Bamalwa, a Director at the All India Gems & Jewellery Trade Federation. Prices in India have fallen 14 percent this quarter, less than the 25 percent drop in London after the rupee lost 8.9 percent against the dollar to an all-time low. Gold is heading for its worst year since 1981 after some investors lost faith in it as a store of value amid speculation the U.S. Federal Reserve will curb debt-buying. Demand in India has fallen after the government increased taxes on imports twice this year to try and rein in a record current-account deficit. The central bank has curbed overseas purchases on a consignment basis and limited imports for local consumption against cash only, prompting retailers to halt sales of coins and bars.

India’s current account deficit hit a record high of 6.7 per cent in the December quarter. The government has blamed rising gold imports for the high current account deficit. India is the world’s biggest buyer of bullion and gold imports are the second biggest import item (in value terms) after crude. Rising current account deficit has pressured the rupee, which hit a record low of 59.98 recently.%% Globally, gold prices have been falling, but the sharp depreciation in the rupee has supported gold prices domestically. Haresh Soni, Chairman, GJF however, said that the gold demand is very less despite the fall in prices last week as most traders had advanced purchases in April and May. Over the past month, the Reserve Bank has put out several guidelines to dissuade gold imports. It has mandated that all imports of gold for domestic consumption can be made only with 100 percent cash margin to curb the supply side to protect the current account deficit. The government, too, has been taking steps to bring down import of gold. Earlier this month, the government increased import duty on gold by a third to 8 per cent. Also, Anil Ambani promoted firm Reliance Capital had suspended sale of physical gold and all gold related investment products in a bid to support the government’s efforts to curb gold import.%% Gold imports accounted for roughly 75 per cent of the CAD in FY12. Despite the government increasing the import duty on gold from 4 per cent to 6 per cent in January, 2013 there has been no let up in imports; on the contrary, the sharp drop in gold prices in April pushed up domestic demand with imports in April and May coming in at close to 300 tonnes, almost 35 per cent of the total imports seen in 2012. That resulted in the trade deficit in April and May ballooning to $17.8 billion and $20.1 billion, respectively. In early June, the government upped the duty from 6 per cent to 8 per cent. Policymakers have taken several steps this month to limit gold imports including raising import duty on gold to 8 per cent, raising the cash margin for imports 100 per cent and prohibiting any kind of credit for imports. Trade associations, however, fear that further measures may be taken. %%

Amidst this scenario, India's biggest jewellers' association, All India Gems and Jewellery Trade Federation (GJF) asked members to stop selling gold bars and coins, about 35 per cent of their business, adding its weight to government efforts to cut gold imports and curtail a distension current account deficit. “As a responsible trade body, we have requested our retailers not to sell gold coins or bars. We need to help the government to solve the CAD (current account deficit) problem. We have decided to take a proactive step to control the current account deficit situation. We have requested retailers to stop selling gold bars and coins for temporary period so that imports reduce," informed, Haresh Soni. This call by GJF, which represents about 90 per cent of jewellers, came just days after financial services company Reliance Capital halted sales of its gold-backed funds. It is believed that the total sale of gold bars and coins were about 35 per cent of the total imports last year. If sale of these items are controlled, gold imports can be reduced by 10 to 15 per cent this year. The appeal is also aimed at easing the shortage faced by jewellers that seems to have emerged in the local market. This is reflected in the increased premiums sought by bullion traders which have risen to $5.5 - $6 / ounce compared to the historical average of $1.5-$2/ounce. Investment demand for gold is estimated to account for about 35 per cent of India's annual gold consumption of close to 860 tonnes. Haresh Soni said that the bullion demand may drop about 20 per cent because of curbs on sales.%% GJF has membership of about 42,000 across India and they have responded positively to this call despite their concerns about the survival of the jewellery industry. India, the world's largest gold consumer, imported 860 tonnes of gold in 2012 calendar year. “While there’s no compulsion, we are certain our members will comply with this request given the concern over the widening CAD,” said Nitin Kadam, Regional Chairman-Mumbai, GJF. “We are supporting the Federation’s call. We are going to reduce sale of gold coins and bars. Instead we will focus on lower carat jewellery and value added products,” said Mehul Choksi, Managing Director, Gitanjali Gems. "We are going to reduce sale of gold coins and bars, instead we will focus on lower carat jewellery and value added products." Haresh Soni said that the Federation will review the decision to stop sale of gold coins and bars after assessing the situation of import of the yellow metal and rupee value against US dollar. The jewellers move comes close on the heels of Reliance Capital suspending gold sales across all its businesses. "Demand in India is price inelastic, the fundamental reasons for gold demand in India cannot be addressed through supply restrictions," said Somasundaram PR, Managing Director for India at the WGC.%% If jewellers decide to abide by the appeal made by GJF, the sales of bar and coins which have dropped by about 50 per cent to 60 per cent in June as per traders in the Bombay Bullion Association is likely to come down further. Most banks have also gradually stopped selling gold coins after the RBI restricted imports of gold on consignment basis in early May. However, not everyone expects the sale of gold coins and bars to fall significantly as buyers may shift to the black market. While the majority of India's gold imports are for consumption via jewellery, the rise in investment demand in the form of bars and coins has added to the import pressure. %%

Between 2010 and 2012, India has, on average, imported 345 tonnes of gold for investment purposes. GJF believes that even if 10 per cent of the current stock of gold holdings is channelled back into the market through schemes such as the gold deposit schemes, India may not need to import gold for next 3-4 years. Based on this view, the trade body wants RBI to further encourage gold deposit schemes to monetise the stock of idle gold in the country. It also suggested that ETFs and gold traded funds should be allowed to loan their idle gold stocks to nominated banks and channelising agencies. “India's gold retailers have traditionally followed a practice of holding a lot of inventory," said Espirito Santo Securities' analyst Nitin Mathur in Mumbai."They benefited when the gold prices were rising but prices have corrected so much, the risk is now that the gold in their inventory is worth less than what they bought it for."%% Amid this situation, gold prices failed to hold Rs 26,000-level by falling Rs 271 to Rs 25,865 per ten grams in futures trade recently as market players relieved of their exposures, even yellow metal in international market recovered marginally after hitting near 3-year low."Falling gold prices, RBI policy and impositions of high taxes are primary reasons of fall in gems and jewellery stocks," said AK Prabhakar, Senior Vice President Equity Research, Anand Rathi Financial Services. The government has raised import duties for gold twice since January, doubling it to 8 per cent, but the central bank moves to tackle supply, such as making jewellers pay for gold up front, have had more impact. In the last 25 year gold prices have been rising in India due to weakness in rupee which was around 10 in 1982 and today it is around 60 compared to the US dollar. Going forward, gold as an asset class could give negative returns, added Prabhakar. The curbs on gold, part of the efforts to control the current account deficit, have added to the costs. The trade is also stressed by aggressive customers who, unaware of the taxes, import duties or the rupee's depreciation, demand cheaper gold.%% Several jewellers, including Gitanjali, Orra, C Krishnaiah Chetty and Popley & Sons, said that they plan to hard sell diamond jewellery and innovative products that will ensure value addition of 25-30 per cent. Although this may hurt sales to an extent, the change in strategy is attractive as the margins in gold are much lower - about 6-14 per cent, the jewellers said. "The drop in international prices is confusing consumers. They are asking us why jewellers are not offering them gold at a lower price. They are not taking into consideration the falling rupee which is making gold costlier here," said Rajiv Popley, Director of Popley & Sons. "As a jeweller we do not want to lose customers. So we have decided to push diamond jewellery with less gold content and also offering entry level products which have low labour charge. So we are reorienting business strategy for the time being to survive," said Rajiv Popley. Gold has not only become expensive in the country due to rupee weakening. There are other reasons too. "The import duty of 8 per cent, VAT of 1 per cent and banking charge of 1 per cent has made the yellow metal costlier in the domestic market. Moreover, banks are charging premium which have made gold expensive. So jewellers are looking at different avenues for survival. Sales have fallen after we requested our jewelers to stop selling coins and bars,” said Haresh Soni. “There would be about 15 percent fall in gold consumption this year.” %%

The plunge in gold to an almost three-year low has failed to lure shoppers in India, the world’s largest consumer, as state curbs and a decline in the rupee to a record bolster the costs of imported metal. Inbound shipments may tumble 52 per cent to 150 metric tons in the three months starting July 1 from a quarter earlier as buyers keep away from stores, said, Bachhraj Bamalwa, a Director at the All India Gems & Jewellery Trade Federation. Prices in India have fallen 14 percent this quarter, less than the 25 percent drop in London after the rupee lost 8.9 percent against the dollar to an all-time low. Gold is heading for its worst year since 1981 after some investors lost faith in it as a store of value amid speculation the U.S. Federal Reserve will curb debt-buying. Demand in India has fallen after the government increased taxes on imports twice this year to try and rein in a record current-account deficit. The central bank has curbed overseas purchases on a consignment basis and limited imports for local consumption against cash only, prompting retailers to halt sales of coins and bars.

India’s current account deficit hit a record high of 6.7 per cent in the December quarter. The government has blamed rising gold imports for the high current account deficit. India is the world’s biggest buyer of bullion and gold imports are the second biggest import item (in value terms) after crude. Rising current account deficit has pressured the rupee, which hit a record low of 59.98 recently.%% Globally, gold prices have been falling, but the sharp depreciation in the rupee has supported gold prices domestically. Haresh Soni, Chairman, GJF however, said that the gold demand is very less despite the fall in prices last week as most traders had advanced purchases in April and May. Over the past month, the Reserve Bank has put out several guidelines to dissuade gold imports. It has mandated that all imports of gold for domestic consumption can be made only with 100 percent cash margin to curb the supply side to protect the current account deficit. The government, too, has been taking steps to bring down import of gold. Earlier this month, the government increased import duty on gold by a third to 8 per cent. Also, Anil Ambani promoted firm Reliance Capital had suspended sale of physical gold and all gold related investment products in a bid to support the government’s efforts to curb gold import.%% Gold imports accounted for roughly 75 per cent of the CAD in FY12. Despite the government increasing the import duty on gold from 4 per cent to 6 per cent in January, 2013 there has been no let up in imports; on the contrary, the sharp drop in gold prices in April pushed up domestic demand with imports in April and May coming in at close to 300 tonnes, almost 35 per cent of the total imports seen in 2012. That resulted in the trade deficit in April and May ballooning to $17.8 billion and $20.1 billion, respectively. In early June, the government upped the duty from 6 per cent to 8 per cent. Policymakers have taken several steps this month to limit gold imports including raising import duty on gold to 8 per cent, raising the cash margin for imports 100 per cent and prohibiting any kind of credit for imports. Trade associations, however, fear that further measures may be taken. %%

Amidst this scenario, India's biggest jewellers' association, All India Gems and Jewellery Trade Federation (GJF) asked members to stop selling gold bars and coins, about 35 per cent of their business, adding its weight to government efforts to cut gold imports and curtail a distension current account deficit. “As a responsible trade body, we have requested our retailers not to sell gold coins or bars. We need to help the government to solve the CAD (current account deficit) problem. We have decided to take a proactive step to control the current account deficit situation. We have requested retailers to stop selling gold bars and coins for temporary period so that imports reduce," informed, Haresh Soni. This call by GJF, which represents about 90 per cent of jewellers, came just days after financial services company Reliance Capital halted sales of its gold-backed funds. It is believed that the total sale of gold bars and coins were about 35 per cent of the total imports last year. If sale of these items are controlled, gold imports can be reduced by 10 to 15 per cent this year. The appeal is also aimed at easing the shortage faced by jewellers that seems to have emerged in the local market. This is reflected in the increased premiums sought by bullion traders which have risen to $5.5 - $6 / ounce compared to the historical average of $1.5-$2/ounce. Investment demand for gold is estimated to account for about 35 per cent of India's annual gold consumption of close to 860 tonnes. Haresh Soni said that the bullion demand may drop about 20 per cent because of curbs on sales.%% GJF has membership of about 42,000 across India and they have responded positively to this call despite their concerns about the survival of the jewellery industry. India, the world's largest gold consumer, imported 860 tonnes of gold in 2012 calendar year. “While there’s no compulsion, we are certain our members will comply with this request given the concern over the widening CAD,” said Nitin Kadam, Regional Chairman-Mumbai, GJF. “We are supporting the Federation’s call. We are going to reduce sale of gold coins and bars. Instead we will focus on lower carat jewellery and value added products,” said Mehul Choksi, Managing Director, Gitanjali Gems. "We are going to reduce sale of gold coins and bars, instead we will focus on lower carat jewellery and value added products." Haresh Soni said that the Federation will review the decision to stop sale of gold coins and bars after assessing the situation of import of the yellow metal and rupee value against US dollar. The jewellers move comes close on the heels of Reliance Capital suspending gold sales across all its businesses. "Demand in India is price inelastic, the fundamental reasons for gold demand in India cannot be addressed through supply restrictions," said Somasundaram PR, Managing Director for India at the WGC.%% If jewellers decide to abide by the appeal made by GJF, the sales of bar and coins which have dropped by about 50 per cent to 60 per cent in June as per traders in the Bombay Bullion Association is likely to come down further. Most banks have also gradually stopped selling gold coins after the RBI restricted imports of gold on consignment basis in early May. However, not everyone expects the sale of gold coins and bars to fall significantly as buyers may shift to the black market. While the majority of India's gold imports are for consumption via jewellery, the rise in investment demand in the form of bars and coins has added to the import pressure. %%

Between 2010 and 2012, India has, on average, imported 345 tonnes of gold for investment purposes. GJF believes that even if 10 per cent of the current stock of gold holdings is channelled back into the market through schemes such as the gold deposit schemes, India may not need to import gold for next 3-4 years. Based on this view, the trade body wants RBI to further encourage gold deposit schemes to monetise the stock of idle gold in the country. It also suggested that ETFs and gold traded funds should be allowed to loan their idle gold stocks to nominated banks and channelising agencies. “India's gold retailers have traditionally followed a practice of holding a lot of inventory," said Espirito Santo Securities' analyst Nitin Mathur in Mumbai."They benefited when the gold prices were rising but prices have corrected so much, the risk is now that the gold in their inventory is worth less than what they bought it for."%% Amid this situation, gold prices failed to hold Rs 26,000-level by falling Rs 271 to Rs 25,865 per ten grams in futures trade recently as market players relieved of their exposures, even yellow metal in international market recovered marginally after hitting near 3-year low."Falling gold prices, RBI policy and impositions of high taxes are primary reasons of fall in gems and jewellery stocks," said AK Prabhakar, Senior Vice President Equity Research, Anand Rathi Financial Services. The government has raised import duties for gold twice since January, doubling it to 8 per cent, but the central bank moves to tackle supply, such as making jewellers pay for gold up front, have had more impact. In the last 25 year gold prices have been rising in India due to weakness in rupee which was around 10 in 1982 and today it is around 60 compared to the US dollar. Going forward, gold as an asset class could give negative returns, added Prabhakar. The curbs on gold, part of the efforts to control the current account deficit, have added to the costs. The trade is also stressed by aggressive customers who, unaware of the taxes, import duties or the rupee's depreciation, demand cheaper gold.%% Several jewellers, including Gitanjali, Orra, C Krishnaiah Chetty and Popley & Sons, said that they plan to hard sell diamond jewellery and innovative products that will ensure value addition of 25-30 per cent. Although this may hurt sales to an extent, the change in strategy is attractive as the margins in gold are much lower - about 6-14 per cent, the jewellers said. "The drop in international prices is confusing consumers. They are asking us why jewellers are not offering them gold at a lower price. They are not taking into consideration the falling rupee which is making gold costlier here," said Rajiv Popley, Director of Popley & Sons. "As a jeweller we do not want to lose customers. So we have decided to push diamond jewellery with less gold content and also offering entry level products which have low labour charge. So we are reorienting business strategy for the time being to survive," said Rajiv Popley. Gold has not only become expensive in the country due to rupee weakening. There are other reasons too. "The import duty of 8 per cent, VAT of 1 per cent and banking charge of 1 per cent has made the yellow metal costlier in the domestic market. Moreover, banks are charging premium which have made gold expensive. So jewellers are looking at different avenues for survival. Sales have fallen after we requested our jewelers to stop selling coins and bars,” said Haresh Soni. “There would be about 15 percent fall in gold consumption this year.” %%

The plunge in gold to an almost three-year low has failed to lure shoppers in India, the world’s largest consumer, as state curbs and a decline in the rupee to a record bolster the costs of imported metal. Inbound shipments may tumble 52 per cent to 150 metric tons in the three months starting July 1 from a quarter earlier as buyers keep away from stores, said, Bachhraj Bamalwa, a Director at the All India Gems & Jewellery Trade Federation. Prices in India have fallen 14 percent this quarter, less than the 25 percent drop in London after the rupee lost 8.9 percent against the dollar to an all-time low. Gold is heading for its worst year since 1981 after some investors lost faith in it as a store of value amid speculation the U.S. Federal Reserve will curb debt-buying. Demand in India has fallen after the government increased taxes on imports twice this year to try and rein in a record current-account deficit. The central bank has curbed overseas purchases on a consignment basis and limited imports for local consumption against cash only, prompting retailers to halt sales of coins and bars.