SINGAPORE/MUMBAI: India's gold imports slowed to a trickle this week after the government raised import tariffs at the same time that global prices strengthened, and these higher prices also deterred purchases from elsewhere in Asia, traders said on Wednesday.
Asian buyers rushed to the market in early January to take advantage of gold prices which were below $1,630 an ounce, their lowest in more than four months.
Prices, however, have since risen to almost $1,700 an ounce, discouraging buyers who usually stock up on gold ahead of the Lunar New Year holidays in mid-February.
Most Indian buyers stocked up on gold in the first week of January, after the finance minister hinted that a duty hike is on the cards.
Last week, India raised import taxes on gold to 6 percent from 4 percent in a bid to curb imports to help rein in a record current account deficit, but industry experts said long-term gold demand is unlikely to waiver.
"We had comfortable sales in the last two months, but after the duty hike no one is interested," said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in Kolkata.
"Over the longer term, unofficial channels will replace official import channels as gold is required from birth till death in Indian tradition," he added. India is the world's biggest gold importer.
The benchmark gold futures contract on the Multi Commodity Exchange (MCX) traded at 30,792 rupees per 10 grams, up from a one-month low of 30,758 rupees hit last week.
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