Indian gold dealers offer discounts as price run-up softens demand

SINGAPORE: Gold in India was sold at a discount this week for the first time in nearly a month as a jump in local prices curbed purchases, while buyers in other major Asian hubs were also put off by higher prices.

In India, dealers were offering a discount of up to $5 an ounce over official domestic prices this week, inclusive of the 10.75% import and 3% sales levies, compared to last week’s premium of $1.5.

“Demand was slowly recovering after state governments eased lockdown restrictions but a sudden rise in prices disrupted the recovery,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in Kolkata.

Gold futures in India, the world’s second biggest bullion consumer after China, were trading around 48,300 rupees per 10 grams on Friday, after rising to its highest level in a month of 48,501 rupees on Thursday.

“The price rise has been confusing jewellers. They want to replenish inventory but are not sure about retail demand given that prices are firm,” said a Mumbai-based bullion dealer with a gold importing bank.

In China, premiums were around $1-$2 an ounce over the benchmark compared with last week’s premium of about $1 an ounce, while Hong Kong dealers quoted premiums of between $0.50 and $1.8 an ounce.

“There is some selling for profit but most are waiting for a dip in gold prices to buy some gold,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

Global benchmark spot gold prices rose to a one-month high at $1,833.65 per ounce on Thursday.

“We expect a downtrend in premiums in China due to a liquidation of individual accounts. Physical demand in Hong Kong and Singapore remain relatively quiet as spot gold prices continue to climb,” said Bernard Sin, regional director at Greater China at MKS.

Premiums ranged from $1.20 to $1.80 per ounce in Singapore. In Japan, gold was sold between on par with the benchmark to a $0.50 premium.