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Indian sub-continent

gold supplies seen improving

BOMBAY: A reduction in entry tax on gold brought into Bombay and a Pakistani move to boost jewellery exports could improve gold supply in the Indian sub-continent, bullion dealers said on Monday.

They said the impact of the reduction in "octroi" or entry tax on gold imports to 0.5 percent from 2.0 percent, effected by the Bombay Municipal Corp from April 2, would soon be felt in India's largest bullion market.

The Bombay bullion market is the focal point for India's gold supplies, setting the benchmark for gold prices across the country.

In the past, some gold arrivals from Dubai, the trading hub of the United Arab Emirates (UAE), had been diverted to Ahmedabad in western India and Delhi in the north.

"Now gold imports into Bombay are expected to rise due to the reduction in octroi duty," said a jeweller.

Bombay gold prices remained subdued last week in anticipation of a rise in supplies. Gold (24 carats) fell 19 rupees to 5,141 rupees per 10 grammes.

"A fresh bout of gold buying for the continuing marriage season is expected around the middle of April," said a Bombay dealer.

Dubai bullion sellers said key demand from Indian and Pakistani expatriates in Dubai and from leading importers in the Indian subcontinent was steady but not spectacular despite upcoming Indian elections and the main Hindu wedding season.

"If the price goes above $400 an ounce physical offtake in the region will slow down," a Dubai wholesaler said.

Gold bullion on the world market was last quoted in Asian trading at $394.60-$395.10 per ounce.

Indian demand for Dubai would remain steady if prices remained in the $390-405 an ounce range but would be very fragile at levels above this, the dealers said.

"Physical demand for sure comes in at $394. At the current level demand is solid," a wholesaler said.

Dubai is the main feeder market into India which is itself the single largest gold market in the world.

In Karachi, a move by the State (central) Bank of Pakistan to boost jewellery exports could double gold imports within 12 months, dealers said on Monday.

"Import of gold will double in one year following the State Bank's incentives to finance export of jewellery," said Saeed Qureshi, a member of Pakistan Gem and Jewellers Association.

No official gold import figures are available, but brokers say about 100 tonnes of gold a year reaches Pakistan through formal and informal channels. GOLD PRICES 24 CARATS PER 10 GRAMMES IN U.S. DOLLARS BOMBAY 151.83 151.76 (April 8 and April 1) KARACHI 137.62 137.50 (April 7 and March 31) DUBAI 127.17 127.17 (April 7 and March 31) (Conversion $3.672 UAE Dirhams, 34.66 Pakistani rupees and 34 Indian rupees)-Reuter