Premiums on gold over domestic prices in India eased this week in keeping with the fall in prices. The premiums of the yellow metal alleviated by around $2 an ounce over official domestic rates from $4 last week, Reuters reported.
Domestic gold prices comprise import duty and the Goods and Services Tax (GST). Meanwhile, the yellow metal prices dipped in the futures market by 1.4% to Rs 52,170 on Friday. This was in conjunction with a fall in global prices.
The retail gold demand in India has been muted because of COVID-19 crisis and surging prices. According to analysts, dealers have been charging premiums on gold despite its weak demand, and restricted supplies on account of suspension of international flights.Also Read: Gold prices may hit Rs 65,000 level by Diwali; silver likely to touch Rs 90,000-mark
Nevertheless, investment demand for gold remained strong last month. Gold ETFs (Exchange Traded Funds) drew inflows of Rs 921 crore in July as against Rs 494 seen in June.
However, the recent price volatility might affect the investment demand for gold, the news agency added, citing a gold wholesaler.
The price of yellow metal in India dropped Rs 2,600 per 10 gram on a weekly basis. Gold rates are down Rs 4000 as compared to recent highs of around Rs 56,000.Also Read: Gold prices at all-time high of Rs 57,008, silver continues to rise
Meanwhile, in global markets, the yellow metal logged its first weekly dip in over two months in the wake of rising US bond yields and profit taking. Spot gold dropped 0.4% to $1,945.12 an ounce on Friday, concluding the week down around 4.5%.
Even with this fall, gold is still up 28% this year. A stalemate over a US stimulus bill also affected the yellow metal negatively.