ASIA GOLD: Price rise dulls activity in top hubs; India discounts hit 5-month high

Physical gold demand across major Asian markets was subdued this week as elevated prices curtailed buying activity, with discounts in India reaching their highest level in five months.

Indian dealers’ discounts were up to $43 per ounce over official domestic prices, inclusive of 6% import and 3% sales levies, up from the last week’s discount of up to $14.

“Footfall at jewellery stores has dropped a lot after Diwali, and sales are also down sharply because prices are so high,” said a Chennai-based jeweller.

Domestic gold prices were around 126,900 rupees ($1,443.77) per 10 grams on Friday, up 6.5% from last week’s low 119,150 rupees. Benchmark spot gold prices were on track for a weekly gain, up 5% this week.

Meanwhile, the India Bullion and Jewellers Association (IBJA) has asked the government to close a policy loophole that allowed import-duty-free platinum-alloy jewellery that contained about 90% gold.

After extracting gold from the jewellery, a few dealers sell it at a discount, distorting trade as banks are required to pay a 6% duty on imported gold, said Harshad Ajmera of wholesaler JJ Gold House in Kolkata.

In top consumer China, bullion traded anywhere from a discount of $8 to a $4 premium an ounce over the global benchmark spot price.

“Asia’s gold market has entered a ‘pause mode’ led by China,” said Bernard Sin, regional director of Greater China at MKS PAMP.

“Sentiment remains cautious: with gold prices at record highs and higher volatility, many traditional retail buyers are staying on the sidelines, waiting for a clearer correction.”

In Singapore, gold traded between a $1.50 and $3.50 premium this week. Gold in Hong Kong was sold at premiums ranging between $0.50 and $2.50.

In Japan, bullion was sold at par to a premium of $0.50 per ounce over spot prices.