Gold Premium in India drops 50% in a week to $30-$40 per Oz

NEW DELHI (Scrap Monster): The speculation and hope that the newly elected government may soon roll back the high gold import duty structure has more than halved the premiums of the yellow metal in the country. The gold premiums in India tumbled more than 50% from $80-$90 per Oz last week to $30-$40 per Oz this week over spot LME.

Last week, RBI had eased the gold import norms, allowing star and premier export houses to trade-in the yellow metal. Also, banks and nominated agencies were allowed to provide gold for domestic use as loans to jewellers and bullion traders.

The government is yet to clarify on whether the gold import duties will be reduced. Analysts however feel that the government may not immediately go ahead with duty cuts, as low gold imports still remains the main weapon in their armory to fight rising CAD.

However, gold industry in the country believes that pro-Gold Modi-led government is bound to make changes to the existing gold policy. They cite the earlier statement made by him during election campaigning that any action on gold should take into account the interests of the public and traders, not just economics and policy.

According to Bachhraj Bamalwa,Director, All India Gems & Jewellery Trade Federation (GJF), the drastic fall in premiums is on account of the recent RBI relaxations and hopes of further easing of gold import norms. However, the premiums are unlikely to fall any further from the current levels.

Meanwhile, gold demand in rest of Asia failed to pick up, despite falling gold prices. The premiums too changed little.