India's Bid to Make Uniform Gold Price
Source: Commodity Online, Rutam Vora (6/29/10)
"India is now successfully implementing uniform prices throughout the nation."
The Indian Bullion Market Association (IBMA), jointly promoted by National Spot Exchange Ltd (NSEL) and bullion trade organizations across the country, had taken the task to announce a uniform benchmark price twice during the day.
As put by Suresh Hundia the President of Bombay Bullion Association (BBA), "The gold prices are almost uniform across the country."
The mechanism is almost similar to that followed by the London Bullion Market Association, which announces the global reference price every day in the morning and evening.
However, the question arises that while India remains a major consumer of Gold, will it remain a price taker as far as Gold prices are concerned?
Hundia has different argument on the issue: "Five years [ago], India looked at overseas prices to determine its local prices. But today. . .there won't be much movement in the international ticker boards till Indian exchange MCX opens in the morning. However the New York Mercantile Exchange (NYMEX) still seems to be ruling the game," he believed. According to him, India's Gold prices are determined by purely demand and supply factors.
India, which is the largest importer of gold, consumes about 25% of global mined gold output every year. However, till recently, it had no national-level physical market. The visibility of electronic spot exchange is still questionable, but gold prices are almost uniform across the country, thanks to electronic exchanges and ticker boards.