Analysts said premiums on physical gold eased due to some supply from bullion importing agencies.
NEW DELHI(BullionStreet): Two days after hitting as high as $20 an ounce, gold margins have come down to $5 an ounce in Indian markets Thursday.
Analysts said premiums on physical gold eased due to some supply from bullion importing agencies. Nominated agencies like MMTC, State Trading Corp. and PEC are controlled by the trade ministry.
Indian authorities have been taking steps to lower the demand for gold as part of their efforts to reduce the country's trade and current-account deficits.
The government increased the import tax on the metal to 6% from 2% over the last year-and-a-half hoping that it would increase prices for local buyers and in turn reduce demand.
The Reserve Bank of India restricted banks from consignment imports of the yellow metal, except for jewellery exporters, after imports in April jumped more than 150 percent, despite a 50 percent hike in import duty in January.
Meanwhile,Indian gold futures jumped more than a percent on Thursday aided by a weaker rupee and firm global trends.
The actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 1.41 percent higher at 26,330 rupees per 10 grams.
The rupee, which hit its lowest level in more than eight months, plays an important role in determining the landed cost of the dollar-quoted yellow metal.