MUMBAI Gold premiums in India, the world's biggest buyer of the metal, jumped on Thursday due to short supplies even as traders, looking to stock up for festivals, waited for prices to fall further from their highest level in more than a month.
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 won't 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 p.m., the most-active gold for August delivery on the Multi Commodity Exchange (MCX) was 0.53 percent lower at 27,105 rupees per 10 grams, easing from the previous day's high of 27,716 rupees, a level last seen on June 20.
Silver for September was 1.42 percent lower at 40,760 rupees per kg.
(Reporting by Siddesh Mayenkar; Editing by Jijo Jacob)
Trending On Reuters
Eighteen village councils in Uttar Pradesh are demanding a local Coca-Cola bottling plant be prohibited from extracting water from the ground, claiming its over usage has led to water scarcity in the area, said an environmental campaign group. Full Article