Gold premium widens on heavy investment demand

Mumbai: Even as 995 purity gold hit a new closing high of Rs 53760 per 10 gm Monday , as per India Bullion and Jewellers Association (IBJA), heavy investment demand for the metal has translated into premiums rising by $1-2 over the London rate, said a banker.

"The premium has risen lately to around $1.5-3 an ounce owing to significant demand from gold ETFs," said Shekhar Bhandari, president, Global Transaction Banking, Kotak Mahindra Bank. The units issued by Mutual funds are backed by actual physical gold.

In the fiscal quarter through June 2020, 11 gold ETF schemes witnessed net inflows of Rs 2040.19 crore , up from Rs 1490.51 crore in the preceding quarter and Rs 52 crore outflow in the year ago quarter.

Since the beginning of the calendar, gold has risen by 37.55% to Rs 53,760.

On commodity exchange MCX, gold expiring Aug 5 traded last at Rs 53867 per 10 gm , a premium of Rs 242 to the October 5 expiry after hitting a record intraday high to Rs 54199. Amit Modak, CEO , PN Gadgil & Sons attributed the backwardated market -- front month trading at premium to October -- to sellers likely to defer some deliveries to the October contract .