Top gold consumer China this week saw physical gold being sold at elevated premiums that held at more than three-month highs, but an uptick in local prices forced Indian dealers to offer bigger discounts to official domestic prices.
Gold changed hands in China at premiums of anywhere between $6 and $15 an ounce to global prices.
“Interest in gold can be ascribed to concerns over the increased fragility in the banking sector,” StoneX analyst Rhona O’Connell said.
Chinese banks are facing increasing risks from rising non-performing loans and diminishing returns.
“Currently, no new import quotas have been issued, and there have been no gold imports into China from previous issued,” said Bernard Sin, regional director, Greater China at MKS PAMP.
China held 67.95 million fine troy ounces of gold reserves at end-June, up from 67.27 million at end-May.
Asia gold: Chinese premiums spike, India demand wanes
“Jewellery demand remains relatively lacklustre” but not as much as in the rest of the world, said independent analyst Ross Norman.
In Hong Kong, gold was sold at $0.50-$2.50 premiums, while Singapore dealers charged $1.50-$2.50 premiums.
“If (global spot) prices fall below $1,900, we might see a bit more demand coming back in,” said Brian Lan, managing director at dealer GoldSilver Central.
Subdued demand in India prompted dealers to offer discounts of up to $7 an ounce over official domestic prices — inclusive of 15% import and 3% sales levies, versus last week’s $4 discounts.
“Retail demand is weak as the wedding season is over, and there are no big festivals. Furthermore, heavy rainfall is also discouraging buyers from stepping out in some big cities,” said a Mumbai-based bullion dealer with a private bank.
Local gold prices were trading around 58,500 rupees per 10 grams on Friday, after falling to 57,651 rupees last week, the lowest since March 15.
In Japan, prices swung between a $0.25 discount to a $0.50 premium.
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