Gold price premium dips in India even as rates fall1 min read . Updated: 18 Oct 2020, 10:29 AM IST
- Analysts say that gold is likely to remain supported on the downside amid increasing challenges to the global economy
- Gold price in India include 12.5% import duty and 3% GST
Physical gold dealers in India charged a premium over official domestic prices for the second week in a row as jewellers stocked up ahead of the festive season. Domestic gold prices in India include 12.5% import duty and 3% GST. Dealers charged an $1 an ounce premium over official domestic prices, as compared to last week's premium of $2, Reuters reported.
Demand from dealers has been improving slowly while a sharp drop in September imports also allowed dealers to charge a premium, analysts say.
Gold imports declined by nearly 53% to $601.43 million in September.
In the futures market, gold prices settled 0.3% lower at ₹50552 per 10 gram on Friday. For the week, gold settled marginally lower in tandem in with a decline in global rates.
In global markets, gold prices dipped over 1% this week, weighed down by a firm US dollar which has been supported during the US stimulus talks stalemate. Surging coronavirus cases in Europe have also helped lift the greenback as investors seek safety amid new lockdown measures.
Fading chances of a US stimulus agreement before the November 3 presidential election dented the gold's appeal as an inflation hedge.
Gold, which has risen about 25% so far this year, is considered a hedge against inflation and currency debasement amid the unprecedented global levels of stimulus. In India, gold rates had hit a record high of ₹56,200 on August 7.
Analysts say that gold is likely to remain supported on the downside amid increasing challenges to the global economy. ETF inflows show buying interest in gold however the pace has been also modest.
Gold may remain choppy in near term, taking cues from US stimulus talks, Brexit negotiations, coronavirus outbreak and vaccine development, they say. (With Agency Inputs)