Physical gold demand stalled in India this week on higher prices, while premiums fell in top consumer China as COVID restrictions dulled activity.
Gold prices in India jumped to 53,462 rupees per 10 grams this week, the highest since mid-April. Global spot gold prices climbed above $1,800 per ounce.
“The market has come to a standstill. Nobody wants to buy at this level. Buyers are on sidelines and watching whether this rally can sustain,” said a Mumbai-based bullion dealer with a private gold importing bank.
Dealers in India were offering a discount of up to $18 an ounce this week over official domestic prices — inclusive of the 15% import and 3% sales levies, down from the last week’s $21.
Meanwhile, supplies of “scrap” old jewellery and coins have risen sharply in the last few days as some consumers look to cash in on the higher prices, said a Chennai-based bullion dealer.
Premiums in China dropped to $2-$12 an ounce this week over benchmark spot prices from last week’s $10-$15.
Asia Gold: COVID curbs take a toll on China market, India still in discount
“Demand could possibly come to a halt if situation goes out of control due to security reasons,” said Bernard Sin, regional director, Greater China at MKS PAMP.
No large shipment of gold into the country is planned, and there is no news of new quotas being issued either, Sin added.
China’s central bank controls the amount of gold entering the country via quotas to commercial banks.
However, sources told Reuters that China is set to announce an easing of its COVID quarantine protocols in the coming days.
In Hong Kong, bullion changed hands between a discount of $2 and a premium of $2.50. In Singapore, premiums between $1.50-$2.50 were charged.
“Premiums continue to stay firm in Singapore because of supply delays resulting in a little tightness,” said Brian Lan, managing director at dealer GoldSilver Central.
In Japan, gold was sold at a premium of $0.50.
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