India gold swings to premium as lower prices lift jewellery demand

BENGALURU: Gold traded at a premium in India this week for the first time in more than three months as a pullback in prices boosted jewellery purchases, while demand in top consumer China remained subdued.

In India, domestic gold prices were quoted around 148,200 rupees per 10 grams on Friday, after touching a two-week low of 145,627 rupees earlier in the week. “Jewellery demand is picking up with the festive and wedding season kicking in, but investors are still holding back as prices continue to fall,” said Chanda Venkatesh, managing director of Hyderabad-based bullion merchant CapsGold.

Dealers quoted premiums of up to USD7 an ounce over official domestic prices, inclusive of 15 percent import and 3 percent sales levies, compared with discounts of up to USD6 last week.

Although gold imports typically increase ahead of the festival season, inflows have been lower than usual this year, tightening domestic supplies, said a Mumbai-based dealer at a private bank.

India’s gold imports in September fell to USD1.8 billion, a slump from USD9.6 billion last year, trade ministry data showed. Meanwhile, several large Indian mutual funds issued public notices late on Thursday suspending bulk subscriptions to gold exchange-traded funds. In China, bullion traded at premiums of USD4 to USD13 an ounce to the global benchmark price. “Buying interest remains subdued as spot gold continues to trade in a wide and volatile range, making physical buyers more cautious,” said Bernard Sin, regional director, Greater China at MKS PAMP. International spot gold prices edged higher, but were on track for a marginal weekly decline. In Singapore, gold was sold between a premium of USD0.50 and USD1.70 this week, while it traded flat to USD1.50 premium in Hong Kong.

In Japan, gold was sold between a USD0.25 discount and a USD0.50 premium. Investment demand for gold in Japan remains weak, with retail purchases showing a similar trend, a Tokyo-based trader said.