The premium on gold in the spot market fell on Wednesday to $80 an ounce from $120-$150 in the past couple of weeks. As prices hit Rs 32,000 per 10g in the domestic market, those holding unofficially obtained imported gold were said to have sold it. That brought down the premium as more gold became available in the market.
Some reports of the government planning to liberalise import of the metal added pressure. Premiums had fallen to $60-70 per ounce in the morning on Wednesday and settled at $80 per ounce (around Rs 1,600 per 10g) over the landed cost of imports in the Mumbai market. Last week, the premium on gold hit an all-time high of $150 per ounce. Owing to the premium being at an all-time high, the domestic demand for gold took a hit last week. That was why premiums started falling. Gold prices in the Mumbai spot market had closed lower at Rs 31,100 per 10g against Rs 31,945 on Monday. "Due to weak demand for gold in the domestic market, premiums have fallen to $60-70 per ounce. Gold jewellery demand is very low at the moment, due to which prices have corrected in the Mumbai spot market," said Suresh Hundiya, a Mumbai-based bullion trader.