Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

Indian Gold Premiums Explode After Nation's Biggest Gold Importer Suspends Bullion Dealers Accounts

Indian Gold Premiums Explode After Nation's Biggest Gold Importer Suspends Bullion Dealers Accounts

Following news last week of a surge in Chinese retail gold premiums as demand for physical bullion soars amid China capital controls, Reuters reports that the chaos in India has sent people rushing to buy gold, paying as much as a 50 percent premium above official India prices. This renewed surge in demand for physical in india follows reports that India's top importer of gold, Axis Bank, reportedly suspending the bank accounts of some bullion dealers and jewelers following the arrest of some executives over money laundering.

 

Last week saw news of reported gold import curbs in China (and looming capital controls) has sent gold premiums in China near three-year highs amid limited supply of the precious metal (as Reuters reports)...

 
 
 

The import curbs may be part of China's efforts to limit outflows of the yuan after the currency's slide to its weakest in more than eight years, traders say. China allows only 15 banks to import gold, including three foreign lenders.

 

"There is severe restriction on the banks' quota to import gold into China. Each one of them have to justify their need," a Hong Kong-based banker said.

 

Gold was sold in China at about $24 an ounce above the international spot benchmark this week. Premiums went as high as $30 last week, the most since January 2014, according to Thomson Reuters data.

 

"Supply has been limited and so the premiums have held firm," said Cameron Alexander, analyst with Thomson Reuters-owned metals consultancy GFMS.

 

And now, as Reuters reports, concerns are growing in India that import curbs or outright confiscation may be coming...

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