Gold premium up again

Premiums for getting physical delivery of gold has increased again and went back to a level prevailing three weeks ago. Against yesterday’s $60-70 per ounce, today in Mumbai market gold was quoted at $110 per ounce higher than its cost of imports which works out to Rs 2000 per 10 gram.

Gold price today closed Rs.335 or 1.09% higher at Rs.31,180 per 10 gram in Mumbai’s zaveri bazar.

The reason for increase in premium is said to be upcoming demand for marriage season and imports of gold likely to remain low to meet that demand leading to increase in premium.

In October imports increased to 24 tons against previous two months average of 11 tons.

However, against the expectations of increase in imports as the confusion around imports were being cleared but yesterday the RBI issued another clarification saying that any duty free import of gold for export purpose can happen only after getting Advance Authorisation or Duty Free Import Authorization and import should happen prior to exports.

Trade interpreted this saying that exports which was looking good till a day before has been tightened against which will result in lower imports and scarcity of gold for domestic use, leading to increase in premiums for physical delivery.