Physical gold dealers in India increased discounts to seven-month highs this week in a bid to lure customers as record local prices hurt demand, while premiums in top consumer China slipped.
Indian dealers were offering discounts of up to $14 an ounce over official domestic prices - inclusive of the 15% import and 3% sales levies - up from the last week’s $9 discounts.
“Demand has dried up due to the price rise. Instead of buying, some investors are selling gold coins and bars,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
Local gold prices hit a record high of 64,460 rupees ($773.11) per 10 grams this week.
Jewellers were not buying since retail demand has slumped due to the price rally, said a Mumbai-based bullion dealer with a private bank.
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In China, premiums fell to $12-$30 per ounce over global spot prices, which hit an all-time peak of $2,135.40 earlier this week, from the $25-$35 premiums charged last week.
“China’s gold premium experienced volatility (this week)… There’s no discussion on new import quotas, with policymakers emphasising the importance of maintaining a stable yuan,” said Bernard Sin, regional director of Greater China at MKS PAMP.
The People’s Bank of China controls the amount of gold entering the country via quotas to commercial banks and it usually uses import restrictions to control the outflow of the domestic currency.
Hong Kong dealers sold bullion at anywhere between on par with global spot rates to $2.50 premiums per ounce.
In Singapore, premiums were little changed at $1.25- $2.25.
“Physical demand in Singapore continued to be slow judging by dealers inventory. We are still noticing more sellers than buyers,” Hugo Pascal, precious metals trader at InProved said.
In Japan, dealers sold gold at par to $1 premiums.
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