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Gold traders brace for lower supplies, higher premiums

Source : REUTERS
Last Updated: Wed, Jul 24, 2013 12:02 hrs
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Gold traders in India braced for a fall in supply and higher premiums ahead of festivals, as the Reserve Bank of India's steps to restrict imports are expected to cut supplies for domestic consumption.

The RBI on Monday moved to tighten gold imports again, making them dependent on export volumes with an eye to reducing a record current account deficit. However, it offered relief to domestic sellers by lifting restrictions on credit deals.

"There will be difficulty (in supplies) when demand rises after August 15," said Haresh Acharya, head of the bullion desk at Ahmedabad-based Parker Bullion, adding supplies are getting squeezed.

The festival season starts in mid-August and will peak with Dhanteras in November. The wedding season also starts around that period.

India, the world's biggest buyer of gold, imported more than 330 tonnes in the quarter to June as traders stocked up anticipating a slew of measures from the federal government to cut record trade deficit.

Gold prices hit their highest level in more than a month.

At 1123 GMT, the actively traded gold for August delivery on the Multi Commodity Exchange (MCX) was 0.09 percent lower at 27,549 rupees per 10 grams as pressure from a stronger rupee was offset by firm overseas markets.

The contract hit a high of 27,716 rupees, a level last seen on June 20.

The rupee, which hit its lowest level in a week on Wednesday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

Silver for September delivery on the MCX was 0.14 percent lower at 41,794 rupees per kg.

The following were the prices of gold and silver in rupees as of 1615 local time in the spot market, quoted by HDFC Bank:


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