29 Nov 2013 Last updated at 13:05:17 GMT
NEW DELHI (Scrap Monster) : The inadequate supply of gold to meet the increased wedding season demand continues to keep the gold premiums at high levels. Premiums in India remained steady at $125-$130 per troy ounce over London prices. The premiums were more or less the same as last week. The higher import duty on gold and the 80:20 export norms on gold imports had trimmed the gold inflow to the country.
In the run up to the festive season, gold premiums had climbed to its peak. Following the muted demand for gold during Dhanteras and Deepavali, the premiums had plunged from the peak by almost 50% to $60-$70 levels. The extremely subdued demand for gold during the festive season had pulled down the premiums to as low as $50.
Taking advantage of the wedding season demand, importers are charging excessively high premiums from jewellers. The premiums shot back to higher levels by the start of the wedding season. The gold premiums shot back to $130 levels mainly on the back of severe shortage of supply and also due to slowdown in recycled gold trade, All India Gems and Jewellery Trade Federation (GJF) observed.
In October, India imported 24 tonnes of gold as against the average gold imports of 11 tonnes during August and September. Trade suggests that the deadly combination of demand surge and supply crunch may further raise the premiums for physical delivery.
Author: Paul Ploumis