This week gold prices in India rose to record high of about ₹49,500 per 10 gram
The domestic price gold price includes a 12.5% import tax and 3% GST
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.
In comparison, investors had pulled out ₹160 crore from this asset class in January-June 2019, according to the latest data available with the Association of Mutual Funds in India (Amfi).
The recent issues of sovereign gold bonds also attracted strong investment interest from subscribers. (With Agency Inputs)