MUMBAI/SINGAPORE Oct 25 Indian gold premiums
hit another record high on Friday because of a supply crunch
ahead of the Diwali festival next week, caused in large part by
government measures to restrict imports of the precious metal.
Local prices were $130 an ounce higher than London prices
, compared with $120 earlier this week and $100 last week,
India, struggling with a high trade deficit and a weak
currency, has made it difficult and expensive for Indians to get
hold of gold by setting a record 10 percent import duty and
stipulating that 20 percent of imports should be used for
Imports for domestic use have virtually come to a halt for
about three months.
"There is no availability of gold. We don't feel like it's
Diwali this year as business has come to a standstill," said
Haresh Acharya, head of the bullion desk at Parker Bullion, a
wholesaler in Ahmedabad.
Gold is an integral part of Indian culture, given as a dowry
for marriages and bought around religious festivals.
Next week India also celebrates Dhanteras, when consumers
buy the yellow metal for auspicious reasons, prompting the sharp
jump in premiums.
"Even jewellers are not willing to pay this hefty premium,"
said Bachhraj Bamalwa, director with the All India Gems and
Jewellery Trade Federation. "Demand has picked up a little bit,
but it is way below our expectations."
An official at a state-run trading house said the firm had
been importing for domestic use but in very small quantities.
"We imported about 100 kgs for domestic use since August,
and the government officials at ground level are taking time to
understand the nuances of the new rules," said the official on
condition of anonymity.
"It will take another 15-30 days for them to smoothen out
imports for domestic use," the official said.
India's imports fell to a mere 7 tonnes in September from a
record 162 tonnes in May.
Demand across the rest of Asia remained soft, with Hong Kong
premiums unchanged for over a month at $1.50 an ounce. Singapore
premiums dropped to $1 this week from $1.50 last week.
Premiums on the Shanghai Gold Exchange fell to a multi-month
low of $2 an ounce on Friday. That compares to highs of $30 seen
(Editing by Alan Raybould)