Premiums rose four fold to $20 an ounce on London prices on Thursday after the Reserve Bank of India tightened gold imports, making them dependent on export volumes with an eye to reducing a record current account deficit.
Premiums have shot up as there is no gold supply, even after paying $20 premium, it is difficult to get gold, said Bachhraj Bamalwa, a director at the All India Gems and Jewellery Trade Federation, adding banks are not committing anything for supply of gold for next week.
Premiums would shoot up to $30-40 an ounce in August, if the same import policy continues, said Mayank Khemka, managing director with Khemka Group, a wholesaler in New Delhi.
The festival season starts in mid-August and will peak with Dhanteras in November. The wedding season also starts around that period.
Current policy is very detrimental and domestic jewellers wont get any supplies, causing premiums to shoot up, said Khemka.
On the Multi Commodity Exchange, gold prices eased from their highest level in more than a month.
At 4.09 pm, the most-active gold for August delivery on the Multi Commodity Exchange (MCX) was 0.53% lower at R27,105 per 10 grams, easing from the previous days high of R27,716, a level last seen on June 20.
Silver for September was 1.42% lower at R40,760 per kg.
Gold, silver tumble on stockist selling & weak global cues
Both the precious metals, gold and silver prices, tumbled in the national capital on Thursday on heavy sell-off by stockists in tandem with a sharp fall in global markets. While gold plunged by R510 to R27,820 per 10 grams, silver lost R755 to R41,225 per kg on poor offtake by jewellers and indutrial units. Traders said the sentiment dampened following a steep fall in gold prices in overseas markets on signs of economic recovery as sales of new US homes in June rose to a five-year high, mainly kept pressure on the precious metals. Gold in New York fell by 1.1% to $1,320.30 an ounce, the biggest drop since July 5 and silver 1.2% to $20.02 an ounce last night. In addition, sluggish demand at prevailing higher levels further influenced the trading sentiment. On the domestic front, gold of 99.9 and 99.5% purity tumbled by R510 each to R27,820 and R27,620 per 10 grams, respectively. PTI