MUMBAI (Scrap Monster): The gold premiums in India today fell sharply by more than 50%. The premiums have plunged from the peak of $130 an ounce last week to $60-$70 an ounce on Tuesday. The drastic fall in premiums is primarily attributed to the extremely subdued demand for gold during the festive season. Moreover, resumption of gold imports by agencies has also helped bring down the high premiums.

 

The official gold imports by the country have declined sharply since July this year. According to estimates, the gold imports by the country during October were only less than 7 tonnes, against an actual demand of around 100 tonnes. Taking advantage of the festive season demand, importers had been charging excessively high premiums from jewellers. The severe shortage of gold had lifted the gold premiums to record high.

 

The gold premiums in India had shot up to nearly 10% over and above the London prices, primarily on the back of severe shortage of supply caused by import curbs and slowdown in recycled gold trade. The premiums sky rocketed to as high as $130 more on a troy ounce of the precious metal.

 

The biggest gold-importing bank in India-Bank of Nova Scotia and the state-run MMTC are reported to have recommenced gold imports into the country. As per industry sources, the premiums in India could drop to levels of $30-$40 per troy ounce in the coming weeks with pickup in gold imports into the country.