Gold Premiums Jump in India

Thursday, 27 June 2013
Written by  Reuters
Published in Gold Investing
A ban on consignment imports has suppliers of gold in India struggling to meet demand. While this cause gold premiums to double in the world’s largest gold buyer nation, futures prices still fell to their lowest point in around a month, as a strong dollar cause gold to fall just about everywhere else.

Positive-Pullback

India, the world's biggest buyer of gold, now requires importers to pay upfront for inventory, making it difficult for smaller jewelers with lower working capital to source supplies. The government also raised the import duty to 8 percent in May to keep a lid on the surging current account deficit.

"There may be some demand from jewelers for raw material," said Bachhraj Bamalwa, former chairman of All India Gems and Jeweler Trade Federation, adding that premiums charged on London prices shot to $20 an ounce on Wednesday from $8-$10 on Tuesday.

Most of the supplies are being met by privately held trading houses and state-run agencies such as Metals and Minerals Trading Corp of India Ltd (MMTC.NS), State Trading Corp (STCI.NS), and PEC Ltd through their imports in April and early May as banks await guidelines from the central bank on outright cash purchases.

"We are unable to supply, though there is demand ... we give deliveries after 2-3 days," said Harshad Ajmera, proprietor of wholesaler JJ Gold House in Kolkata.

Indian gold imports fell to $36 million in the second half of May from an average of $135 million per day in the first half, Finance Minister P. Chidambaram said earlier in June.

Gold has faced an ongoing uphill battle in 2013. Everything from the Fiscal Cliff issues to the Fed choice to more than likely pull back QE measures has taken its toll on gold.

What was supposed to be a banner year for the yellow metal ( most thought that gold would hit or come close to the $2,000 per ounce price mark) has turned out to be a huge struggle for the precious metal, as far as price goes.

We will see if gold can recoup some of its price point tomorrow as we head into the weekend and then gear up for the last week in June.

Original Article: Reuters

Read 1336 times