Indian premiums fall as wedding demand eases

By Siddesh Mayenkar

MUMBAI (Reuters) - Gold price premiums in India, one of the top buyers of the metal, fell further due to lack of demand even as supplies trickled in from a few importers.

Local traders quoted a premium of $105 an ounce on London prices, down 12.5 percent from levels quoted last week. Premiums had struck a record of $160 in early December.

Gold demand from wedding buyers has dropped after picking up last month, while part of the demand was met by recycled or smuggled gold.

"There could be no demand until January 15 due to fewer auspicious days for marriages," said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in Kolkata, adding Bank of Nova Scotia, government-run MMTC , Bank of India and Union Bank of India have been supplying to the exporters and domestic market under the new rule.

Most of the gold imports arrive through more than 30 private and state-run banks and a few trading agencies like MMTC, State Trading Corporation and PEC, among others.

India, struggling with a record high trade deficit, has made it difficult and expensive to get gold by imposing a record 10 percent import duty on the metal, and stipulating that 20 percent of imports should be used for exports.

Premiums are falling because of easing demand and importers have been successful in getting some, said Haresh Soni, chairman of All India Gems and Jewellery Trade Federation (GJF), which groups more than 300,000 jewellers.

Imports fell 21 tonnes in November last year, from a record of 162 tonnes in May. Imports are expected to be 500-550 tonnes this year under the new import rule, trade body GJF has said.

"A little more than 20 percent is going for exporters, and a little less than 80 percent goes for domestic jewellers," said a dealer with a private bullion importing bank in Mumbai, who was not authorised to speak to media.

"Our imports have been reasonable... currently total imports should be around 20-25 tonnes, but once imports processes are streamlined, 30 tonnes a month will be the new norm," the dealer added.

(Reporting by Siddesh Mayenkar, editing by William Hardy)