Gold import in India has halted in recent days, with the market offering a widening discount over prices in London, now at $12-15 an ounce or Rs 240-300 per 10g.
When demand is good, importers charge a premium over London prices. With this not so, they would like to offload their stocks; holding the metal is costly. The present discounts are due to a huge carryover stock from imports in November, when 151 tonnes came in, far above India’s normal monthly demand.
Only 39 tonnes of gold was imported in December, when the marriage season had paused. The latter has restarted after January 14 but most of the buying was done when prices were lower in October-November. Now, demand is also absent as global prices have shot up to $1,300 an oz.
A person working closely with gold importing agencies said the high discounts had led to a halt in imports. The price in India is determined on the cost of imports and the margins in these are thin. The prevailing discount of one per cent makes these unviable. This month so far, only 15-20 tonnes might have come in.
The price was around $1,200 when most imports took place and selling that stock even at a discount generates good profit, as gold is now around $1,300 an ounce.
On the spot market here, gold closed at Rs 28,290 per 10g, up Rs 130 from Thursday. Silver closed at Rs 40,100 a kg.