By Rajendra Jadhav
MUMBAI (Reuters) -Silver premiums in India have fallen sharply as demand eased following the last two weeks’ festive rush, prompting potential buyers to delay purchases, bullion dealers told Reuters.
Earlier this month, premiums in the world’s largest consumer of silver climbed as high as 10% over official domestic prices amid strong demand, forcing some physically-backed exchange-traded funds to temporarily suspend new subscriptions.
“The rush to buy silver is over. Demand has slowed, and premiums have returned to normal levels,” said Chirag Thakkar, chief executive of Amrapali Group Gujarat, a leading silver importer.
BUYERS TURN WARY
Silver premiums over official domestic prices have come down to 25 to 40 cents per ounce this week from more than $5 earlier this month, dealers said.
Indians were celebrating the Dhanteras and Diwali festivals earlier this month, when buying gold and silver is considered auspicious and among the busiest bullion-buying days in the country.
During the price rally, investors eagerly pursued silver, often paying higher premiums than usual, said a Mumbai-based bullion dealer with a private bank.
“Now, sentiment has changed due to the recent price correction. Investors are waiting for prices to settle before making purchases,” the dealer said.
Domestic silver prices have corrected to 147,000 rupees ($1,672) a kg after hitting a record high of 170,415 rupees earlier this month. Silver prices have risen 68% so far this year.
This price rally attracted a record inflow of 53.42 billion rupees into silver ETFs in September and more than doubled India’s silver imports from August, reaching 1,012 metric tons.
In the second week of October, ETFs struggled to procure silver in the local market due to shortages, but supplies are now sufficient, said a fund manager, who declined to be named.
Flows into silver ETFs have also slowed over the past few days, he said.
Earlier this month, rising Indian demand also pushed up silver lease rates, the cost of borrowing physical silver in London.
($1 = 87.8950 Indian rupees)
(Reporting by Rajendra Jadhav. Editing by Mark Potter)
