NEW DELHI (Scrap Monster): The physical gold premiums in India have plunged to nine-month lows. According to market players, the premiums which quoted at $15 to $18 per Oz more than halved during the week to under $10 per Oz. The premium on gold quoted at $8 per Oz at Zaveri Bazaar in Mumbai- the major hub of gold trade in the country.

The retail demand for gold has weakened further. The weak retail demand has choked rise in domestic gold prices in tandem with rallying international prices on Thursday. While the international prices surged over $10, the prices in India were up only by Rs.50 per 10 grams and just managed to hold the levels of Rs. 27,000 per 10 gram.

Earlier, the policy change announced by the Reserve Bank of India (RBI) to allow star and premier export houses to trade-in the yellow metal had send the spot premium on gold from $30 to $40 to $20-$15.

Gold traders say that customers are seen sitting on sidelines, as they expect a favorable decision on lowering gold import duty during Budget, which in turn may lead to further fall in gold prices in the country. There are hopes of 2%-4% cut in gold import duty to be announced by the newly elected government during Budget presentation in July second week.

According to industry participants, the current low premium on gold is the lowest since September last year, when people had rushed to sell their assets to take advantage of the unexpected rally in gold prices.