The gold price rose above the psychological $1,300 threshold yesterday on news that the Central Bank of India (CBI) is to ease gold import restrictions.

The newly elected Bharatiya Janata Party have confirmed the CBI is to relax the rule which currently requires 20% of all imported gold into India to re-exported.

The gold import restrictions imposed by the previous government increased gold’s scarcity causing premiums to soar and smuggling to rise. During the Indian wedding season premiums for an ounce of gold reached $170 over the official spot price.

As a result of the restrictions overall gold demand in India slipped 26% in Q1 of 2014 and China overtook India as the world’s largest consumer of gold.