While gold price is smashing records globally, Indians are now willing to pay so much more for access to physical gold on Dhanteras and Diwali that premiums have risen to their highest level in more than a decade.
Gold prices in India hit a record high of ₹1,31,699 per 10 gm this week. Dealers quoted premium of up to ₹782 per 10 gm (over official domestic prices, inclusive of import and sales levies) compared with about ₹460 per 10 gm last week.
“The ongoing price rally is boosting investor interest in gold, even as the jewellery demand remains weak,” Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji, told Reuters.
Jewellers are stocking up on small gold coins and bars in preparation for the upcoming festival, said a Mumbai-based bullion dealer with a private bank.
Indians will celebrate the Dhanteras and Diwali on 18 October and 21 October — among the busiest gold-buying days in the country.
Gold smuggling into India has surged due to record-high prices and supply shortages, government and industry officials told Reuters.
Ordinarily, a retail run on investment gold might signal a mature rally, but almost every expectation around gold price behaviour seems to have been proven wrong, independent analyst Ross Norman told Reuters.