Gold Premiums in India Jump as Auspicious Day Seen Luring Buyers

May 02, 2014 6:07 am ET

May 2 (Bloomberg) -- Gold premiums in India, the world’s top consumer after China, jumped as the country celebrates its second-biggest bullion buying festival of Akshaya Tritiya today.

The fees that jewelers pay to buy gold from importing banks increased to as much as $110 an ounce over the London cash price from about $40 two weeks ago, Bachhraj Bamalwa, a director with the All India Gems & Jewellery Trade Federation, said by phone from Kolkata.

The festival, which is considered by the nation’s more than 900 million Hindus as an auspicious day to buy precious metals, saw a surge in demand last year after global prices slumped into a bear market. Jewelers are banking on an increase in demand today to end a sales slowdown caused by import curbs brought in to narrow a record current-account deficit.

“What we are hearing from different centers is that demand for Akshaya Tritiya is good so far,” said Bamalwa, whose federation represents 300,000 jewelers and bullion dealers. “People were resisting purchases in the last one month as they were waiting to buy today. Prices are stable and there is more demand for jewelry rather than coins and bars.”

Gold for immediate delivery was little changed at $1,285.03 an ounce at 3:05 p.m. in Mumbai. Futures on the Multi Commodity Exchange of India Ltd. were at 28,617 rupees per 10 grams. Imports may total 30 metric tons in April from 118 tons in the same month last year, Bamalwa said.

Purchases will pick up in the evening as the summer heat keeps buyers away, Kumar Jain, a spokesman for the Indian Bullion and Jewellers Association Ltd., said by phone from Mumbai. In India, bullion is bought during festivals and marriages as part of the bridal trousseau or gifted in the form of jewelry by relatives. Dhanteras in October is the biggest gold buying festival.