Premiums for physical gold rose sharply in China this week, buoyed by optimism around the country’s reopening before Lunar New Year festivities, while Indian traders offered steeper discounts as record-high local prices dented consumer sentiment.
Premiums as high as $30 an ounce over global benchmark spot prices were charged in top bullion consumer China, compared with last week’s $8-$14 range.
“The Chinese re-opening is a mixed bag of expectations… it is freeing up the economy and by extension demand for gold is firm, but the rapid rise in COVID cases threatens to throw the positive developments into reverse,” independent analyst Ross Norman said.
Buying in China normally picks up ahead of the Lunar New Year holidays, which this year run from Jan. 21.
Bernard Sin, regional director, Greater China at MKS PAMP, said the premiums remained in a volatile range this week, and the current purchasing power may also be partly due to an appreciation in the Chinese yuan.
Meanwhile, gold discounts in India widened to their highest level in six months as local gold prices rallied to an all-time high, surpassing a previous record hit in August 2020.
“Buyers are just waiting for the correction,” said a Mumbai-based dealer with a private bank.
Dealers were offering a discount of up to $35 an ounce over official domestic prices — inclusive of the 15% import and 3% sales levies, up from the previous week’s $32.
Asia Gold: India demand slows as high prices, holidays put off customers
Discounts are widening as grey market operators aggressively sell gold in the market as their margin increases along with the rise in bullion prices, said a Chennai-based bullion dealer.
Indian gold refiners have nearly stopped imports of gold ore, a semi-pure alloy, as grey market operators offer hefty discounts to market rates and cut into their slender margins, making business a losing proposition.
In Hong Kong, gold was sold on par with the benchmark to a premium of $3, while in Singapore it ranged between $1.50 and $3.
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