India gold premiums jump despite surging imports

MUMBAI (Scrap Monster): The gold premiums in Mumbai climbed higher during the week. The gold which had traded at a premium of as low as $1 during the previous week has now increased to $2-$3 per ounce over London spot prices. This is despite a huge rise in gold imports by the country during the past month.

The official gold import figure for the month of March is yet to be announced. According to rough estimates provided by the Ministry of Commerce and Industry, the monthly imports might have totaled nearly 100 tonnes during the month. However, importers claim that actual imports may have been even higher at around 120 tonnes. One has to wait until the release of official government data in mid-April.

Meantime, the Indian government announced relief packages to farmers affected by hailstorms in Northern and Western parts of the country. This should augur well for gold demand in the country during this month. Moreover, the country is about to enter into monsoon season, which according to Met department predictions must be ‘normal’ to ‘good’. Incidentally, farmers totaling nearly 120 million in number account for 60% of the annual domestic gold consumption by India.

The gold demand is likely to climb higher ahead of ‘Akshaya Tritiya’ festival. However, gold prices above Rs 27,000 per 10 gram are likely to dampen the festive gold sales in the country.

Elsewhere, spot premiums at Chinese Shanghai Gold Exchange remained at $3.50 per ounce over spot prices on 1 kilogram bars. The premiums in Hong Kong hovered around $1.50 per ounce. Premiums in Singapore remained at $1.50 per ounce during the previous week. Bangkok premiums went marginally higher to $2 per ounce from $1.50 per ounce during the prior week. Meantime, Dubai gold premiums dropped to $0.25 cents per ounce.