Traders look up to GST for lower rates as gold prices remain volatile on global cues
KOCHI : Gold price is likely to remain fluid and the industry pins its hope on the goods and services tax (GST) for lower rates on the yellow metal.
The price dipped below the Rs 30,000-mark on Monday, plunging Rs 350 to Rs 29,750 per 10 grams. Traders said that apart from a weak trend overseas, the fall in demand from local jewellers and retailers following the end of the marriage season mainly pulled down gold prices.
In the national capital, gold of 99.9 and 99.5 per cent purity tumbled by Rs 350 each to Rs 29,750 and Rs 29,600 per 10 grams, respectively. It had gained Rs 375 in Saturday’s trade. Sovereign, however, remained unaltered at Rs 24,500 per piece of eight grams.
“Global uncertainties followed by US President Donald Trump’s new policies are affecting the gold market the world over. The trend is likely to continue. Based on the tax rate on the yellow metal once GST comes into effect, there may be changes in price domestically,” said Ramesh S Pai, partner, A Geeri Pai Jewellers.
The industry bats for 1-1.5 per cent tax on gold under the GST regime. Consumer states such as Bihar and Kerala had suggested six per cent rate.
“Currently, the hope of interest rate hike in the US strengthens the dollar and in turn decreases gold price as people sell gold and buy dollar. But, the range for an ounce of gold will be in the range of $1,200 to $1,275. So, there will be fluctuation in prices of the yellow metal,” said Surendran Koduvally, general-secretary, All Kerala Gold and Silver Merchants Association.
“In 2017, the price of gold will be fluctuating as there may be increase in price but correction may follow. After July, the price of gold will be determined by the rate of tax imposed on the metal. A lower rate will decrease the price but a higher rate will increase smuggling. For instance, the global rate for one kg of gold is Rs 26.63 lakh but in India it is sold for Rs 29.50 lakh. The reason being the taxes, which only encourages the grey market,” said S Abdul Nazar of Koickal Jewellers and coordinator Kerala Jewellers Association Coordination Committee.