Smuggled Gold Supply Dearth Takes Spot Gold Prices to Premium

SEATTLE (Scrap Monster): The gold market in India has started showing signs of good recovery. The reduced supply of smuggled gold in the country has taken spot gold prices to a premium, for the first time this year.

The ban on operation of international flights, as part of Covid-19 pandemic restrictions, has dried up supply of smuggled gold into the country. As per estimates, nearly 120 tonnes of gold were smuggled into the country in 2019. The smuggled gold volumes this year are likely to be at significantly lower levels.

ALSO READ: Gold Smuggling Continued Unabated in Indian Airports

According to Indian Bullion and Jewellers’ Association (IBJA), the lockdown restrictions have impacted the operations of smugglers. The smuggled gold, as it evades prevailing high import duty structure, is often sold to dealers at discount to market prices. The absence of grey market gold has forced dealers to buy gold at premium. The spot gold prices were at premium of up to $3 per ounce, as compared with discount of $22 per ounce during the past week.

With the resumption of international and domestic flights following lifting of norms, the number of gold smuggling incidents too has started to crop up. For instance, customs authorities seized over 30 kilograms of smuggled gold from a diplomatic consignment at Thiruvananthapuram International Airport a South Indian airport