For the first time this year, physical gold sold at a premium in India this week even as record high prices continued to deter buyers. Driven by plunging imports, dealers charged premiums of up to $3 an ounce over official domestic prices, up from last week's $22 discount, Reuters reported. The domestic price includes a 12.5% import tax and 3% GST.
India's gold imports dived 86% year-on-year in June because of record high prices and as international air travel was banned in response to the COVID-19 pandemic.
This week domestic prices in futures market rose to record high of about ₹49,500 per 10 grams. So far this year, gold prices in India are up about 25%, tracking a rally in global rates and rupee's depreciation against US dollar. On Friday, gold prices settled at about ₹48,900 per 10 gram on MCX.
"The fear that renewed lockdown may derail economic recovery all over the world, led traders seek shelter of gold, which is considered a safe-haven asset," Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
But investment demand for gold in India remained strong, in line with a similar trend seen in other markets.
Gold exchange traded funds or ETFs in India saw hefty net inflows of over ₹3,500 crore in the first six months of this year as investors continued to hedge their exposure to riskier assets amid the COVID-19 crisis
Courtesy - Live Mint