Regional premiums for gold in India were higher on Wednesday because the Christmas holidays were restricting imports from Europe, sources said.
The Platts Gold Premium India was assessed at a $1.75/oz premium to the London price Wednesday, up $0.75 from Tuesday, after regional prices had fallen to a discount last week.
"Premiums across the south and west of India are higher, with retail demand remaining strong, but fewer imports coming into the country now. European participants are on holiday which is creating a supply shortage," an Ahmedabad-based dealer said.
An Delhi-based refiner said that while supply was tighter across coastal areas of India, weak demand in Delhi meant a greater quantity of Delhi-refined gold was being sold in other areas of India.
"Ahmedabad and Mumbai are the best places to send gold at the moment, as demand in Delhi has been poor throughout December. With fewer imports coming into India, Ahmedabad and Mumbai gold prices are trading at a premium to Delhi which is attractive for business," the refiner said.
The refiner added that the spread between Ahmedabad and Delhi prices stood at around $0.50/oz.
Consensus across the market was that December imports were not expected to match those in November because of the holidays.
In November, Indian gold imports rose to 113.1 mt, almost triple October's imports and the second highest monthly volume of 2015.
Throughout December, sources said dore imports, which rose rose two and a half times year on year in Q3, had also dropped because of holidays in exporters such as Ghana.
While aggregate import volumes for December are expected to have dropped off, a dealer said demand remained strong in India at the end of 2015.
"Even though many participants in the Indian market expected prices to drop following the Fed rate rise, demand is still strong in the country even with dollar prices above $1,050/oz," the dealer said.
At 1433 GMT, on Wednesday the London spot price for gold stood at $1,060.70/oz, with prices largely remaining above $1,050/oz after the US interest rate rise on December 16.
