GOLD PHYSICALS WEEKLY - Chinese gold premium spikes, Indian imports surge

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The premium for gold in China has returned to normality, following a brief spike earlier in the week that saw many arbitrageurs taking advantage of the devaluation of the currency.
The premium in Shanghai hit heights of $7 over the London spot price earlier in the week before settling back at an average of $2-3, a level unchanged from last week, traders said.
On Tuesday morning, the People's Bank of China devalued its currency by 1.9 percent against the US dollar, the biggest one-day drop since 1994. Two additional devaluations followed on Wednesday (1.6 percent) and Thursday (1.1 percent).
As a result, the Shanghai physical gold and deferred contracts shot 0.7-0.8 percent higher than the London price at one stage, a Chinese trader told FastMarkets.