By Siddesh Mayenkar and Lewa Pardomuan
MUMBAI/SINGAPORE (Reuters) - Gold premiums in India, the world's second biggest consumer after China, jumped to their highest level in more than two-and-a-half months due to short supplies amid firm demand ahead of the second-biggest gold buying festival.
Premiums for gold bars rose more than 23 percent to $110 an ounce on London prices, a level last seen in early February, compared with $89 an ounce earlier in the week. Premiums had struck a record of $160 an ounce in December last year.
"There is less of supplies coming from importers. Even supplies from smuggling has been impacted due to increased checks in election period," said Chirag Thakker, director at Amrapali Group, based in western Indian city of Ahmedabad.
Supplies of gold were scant in the physical market due to spending curbs during elections ahead of the second-biggest gold buying festival of Akshaya Tritiya on May 2. [ID:nL3N0LG2EY]
"Premiums are likely to stay at elevated levels for while until the supply issues are resolved," said a dealer with a private bullion importing bank in Mumbai.
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To guard against bribing voters during the ongoing elections, the Election Commission has made it mandatory for individuals carrying more than 50,000 rupees ($820) to provide documentation, such as a proof of identity and an explanation for the source of funds.
India's gold imports in April and May could be less than half of arrivals in March, industry officials said. [ID:nL3N0N60WI]
UNCHANGED IN REST OF ASIA
Gold bar premiums were mostly unchanged in Asia this week, with a soft yuan curbing demand from top consumer China. Investors are now eyeing next week's U.S. Federal Reserve Open Market Committee's meeting on interest rates for trading cues.
Premiums for gold bars in Hong Kong were quoted at 80 cents to $1 an ounce to the spot London prices, while in Singapore, a centre for bullion trading in Southeast Asia, the premiums were at $1 to $1.20 to the spot London prices - both mostly unchanged from a week ago.
"It seems that in general, premiums in Asia are about $1 to $1.20 nowadays. After last night's pull down and then rebound, the market is quiet," said a physical dealer in Singapore. "It's possible that people are waiting for prices to stabilise."
($1 = 61.0550 rupees)
(Reporting by Siddesh Mayenkar; Editing by Gopakumar Warrier)