MUMBAI Indian gold premiums hit another record on Thursday, driven by lower supplies to meet firm demand for weddings, which will continue till May.
Local prices were $150-160 an ounce higher than London prices, compared with $125 earlier this week, traders said.
"Only Scotia Bank, State Bank of India and some trading agencies like MMTC etc are importing and most of it is going to exporters. There is no other option for domestic jewellers but to pay high premiums," said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the eastern city of Kolkata.
Most of the wedding demand is being met through recycling old jewellery or through smuggling, traders said.
Gold is often gifted to brides in India, which is vying with China for the world's number one consumer.
India, struggling with a record high trade deficit, has made it difficult and expensive to get supplies of gold by imposing a record 10 percent import duty on the metal, and stipulating that 20 percent of imports should be used for exports.
"Imports have reduced to 25 percent of the normal average imports... domestic jewellers are facing the brunt of this in the wedding season," said an official with a private bank importing bullion.
The government would wait till the first quarter of the next fiscal year and may not relax rules now after implementing a policy which has faced so much opposition, the official added.
Imports plunged to 23.5 tonnes in October from a peak of 162 tonnes in May.
Demand in the rest of Asia picked up after prices fell below $1,220 an ounce, dealers said. Premiums in Hong Kong and Singapore remained stable this week. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Prateek Chatterjee)
Trending On Reuters
Three of India's leading state-run lenders reported a drop in their first quarter net profits, weighed down by rise in provision for bad loans and cooling expectations of a turnaround in the country's dominant but ailing government banking sector. Full Article