Premiums charged for physical delivery of gold shot up and quoted around $15 on Wednesday on rumours that the Reserve Bank of India (RBI) or the ministry of finance might impose more restrictions on gold imports. Premiums had fallen to below $10 per ounce on Tuesday after Diwali holidays, as new gold arrived in the market.
Trade and industry circles believe that in a day or two, more restrictions in the form of tightening import norms of 80:20 or fixing an import quota for star and premier trading houses or even linking import by star and premier trading houses to their past exports instead of imports as of now might be possible. The import norms need to be tightened to ensure gold import doesn't shoot up, as a long marriage season is ahead and gold prices are lower.
Due to imports by trading houses, physical delivery premiums have fallen. India Bullion and Jewellers Association have recommended the government to cut import duty, which will effectively reduce smuggling.