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Premium on gold eased this week in India as physical demand continued to remain muted. In India, premiums eased to about $4 an ounce over official domestic prices, from last week’s $8, Reuters reported. Soaring high prices and coronavirus crisis continued to impact gold demand. Domestic gold futures prices soared to a record ₹56,191 per 10 grams intraday on Friday.
Gold prices in India settled 1.74 % or ₹1,000 lower ₹54,876 per 10 gram, in tandem with a correction in global prices. Gold fell from a record as better-than-expected US jobs data.
Dealers say that suspension of international flights has led to some supply issues which has allowed dealers to charge premiums. India imports bulk of its gold requirement while domestic prices include 12.5% import duty and 3% GST.
Muted demand was seen in some other Asian hubs like China as a worsening pandemic kept retail buyers away with global benchmark spot prices rose to new highs.
Gold prices in India are up over 43% this year, tracking a global rally as the coronavirus crisis, low interest rates and geopolitical risks spark a flight to precious safe-haven assets like gold.
Still many analysts remain bullish on gold, citing the possibility of more stimulus as global economic recovery remains wobbly.
Earlier this week, the Reserve Bank of India increased the LTV ratio for gold loans by banks to 90% from the earlier 75% in a bid to make money available to people affected by the coronavirus pandemic. Also, gold loans are mostly short-tenure loans of anywhere between 3 to 24 months, it said.
This relaxation will be effective for a limited period, till March 31 next year, the RBI said. (With Agency Inputs)
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