India May Move Gold Prices Higher

Gold premiums in top consumer India could jump to as much as $5 an ounce over world prices next week, from being almost at par, after Finance Minister Arun Jaitley surprised jewellers by maintaining import duty at a record level in Saturday’s budget.

The wedding season that extends to May typically raises gold demand, but many had delayed purchases expecting a cut in the 10 percent tax. Buying had been muted in the past few weeks in the otherwise buzzing jewellery centres, Zaveri Baazar in Mumbai and Karol Bagh in New Delhi.

“Gold prices were declining on expectations of a duty cut but now prices would rise and premiums would shoot to $3 to $4 an ounce,” said Rahul Gupta, director at P.P. Jewellers in New Delhi.  Keyur Shah, head of precious metals at retailer Muthoot Pappachan, reckons jewellers and manufacturers will replenish their inventory from Monday, boosting premiums to $5 an ounce.

Reuters

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