Virus Impact: Gold Refineries affected and leads to a close down

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VDue to the Covid-19 impact, most of the sectors in countries have suffered shutdown. When coming to gold, India is the second biggest consumer in the world but now the situation became worse after the global outbreak of Covid-19. In its impact half of the gold refineries in the country have been closed down. As international flights have not been operating, impure gold is not being imported from Switzerland, Peru, and Ghana, and also out of 20 refineries in the country, 10 refineries which are engaged in refining impure gold have been shut down. The location of these refineries being Delhi, Uttarakhand, and Ahmedabad. Previously, approximately 20 tonnes of dore (impure) gold was coming to India from these foreign countries.

James Jose, secretary of the Association of Gold Refineries mentioned that the supply of dore gold has been halted from these foreign countries in the course of the outbreak of the Covid-19 pandemic and the lockdown. The refineries which were only refining imported dore gold have also been closed down. It is very doubtful when this critical situation would improve. The demand for gold in India has dropped and therefore, the stock which is still there is enough to meet the domestic demand. He also added that these refining units are far from the major gold markets of south India, Maharashtra, and West Bengal, because of this great distance getting old gold or scrap gold is also arduous for them.

Gold dore refers to a bar composed of a mixture of valuable metals and these bars also contain gold and silver. This dore bar is usually manufactured as part of the mining and refining process and the other fact is that it can be created from scrap gold also. Approximately 50-75% of pure gold is contained in a dore bar. These bars need additional refinement before the metal can be used as raw material for manufacturing gold products. Multi Commodity Exchange (MCX) is considering the possibility of accepting of bullion bars which are refined by Indian refineries for delivery through their contracts to enable the delivery of gold and silver refined in India. MCX obtains serially numbered gold and silver bars of the specified quality standard of London Bullion Market Association (LBMA) approved refiners, along with bars of Emirates Gold. The stated purity/fineness for the Gold and Gold Mini contracts is 995 and for the Gold Guinea and Gold Petal contracts is 999, while for the silver, Silver Mini and Silver Micro contracts and its fineness is 999. 

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