MUMBAI: Physical gold traders in India braced for higher premiums on Wednesday on expectations of lower supplies after the central bank extended ban on imports of the yellow metal on consignment basis to trading houses.
The Reserve Bank of India on Tuesday extended ban on gold imports on consignment basis by government-run agencies like MMTC, STC, PEC and other star trading houses after restricting banks last month, a move triggered by 162 tonnes of imports in May, at least twice the normal volume.
"Supplies will get more scarce... There won't be any imports for the next two-three days until clarity comes on outright cash basis," said Mayank Khemka, managing director of Khemka Group, adding premiums would go up.
Premiums ruled at $5-$6 an ounce on London prices, said a wholesaler in Mumbai. On the Multi Commodity Exchange, gold futures edged higher, hovering near their highest level in nearly a month due to a weaker rupee.
The actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 0.23 percent higher at 27,070 rupees per 10 gram.
The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.
"Supplies have stopped from all sides... We will have smaller lots coming in instead of larger lots due to cash payments," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in Kolkata.
Silver for July delivery on the MCX was 0.23 percent higher at 43,865 rupees per kilogram.
