Premiums drop sharply as India delays gold import curbs

NEW DELHI (Scrap Monster): The gold premiums in India have plunged to almost half in the absence of announcement of fresh gold import curbs. The premiums for physical delivery of gold which had surged to $25 per Oz in anticipation of policy announcement have now fallen by almost half to $13 levels.

Earlier, sources from the Finance Ministry had indicated that the government is most likely to announce fresh curbs on gold imports. Media reports indicated that the measures had already been formulated and the announcement could be expected any time. In relation to this, senior officials had had several rounds of discussions with Finance Ministry officials during past two weeks. However, the government has not come up with any announcement so far.

Market participants had forecast tighter norms on gold imports following sudden surge in gold imports by the country during September and October this year. According to trade statistics, the country imported 98 tonnes of gold in September. The October gold imports skyrocketed 280% over the previous year to 113 tonnes. The combined import bill for two months had peaked to $7.93 billion. This raised fears of fresh curbs that in turn took the gold premium to as high as $25 per Oz.

According to bullion dealers, the gold imports continued to remain strong in November, on account of higher demand during ongoing wedding season.

The gold buying activity has picked up, especially due to bottomed out gold prices. The increased demand has provided good support to domestic gold prices in India. However, weak global trend has limited the gains. Gold prices in India went higher by Rs 130 per 10 grams to Rs.26, 930 yesterday. On the other hand, international gold prices have dropped from three-week high to slip below $1,200 per Oz.