Delhi: Gold jewellery makers in India were offering discounts to attract buyers as sales slowed to a trickle despite approaching Hindu festivals in the world's largest consumer of bullion.
But in other parts of Asia, gold's falls from a two-month high hit last week ignited buying from jewellers in Indonesia and Thailand as well as retail investors in Japan, keeping premiums for gold bars steady on Tuesday.
Gold was trading at $846.00 an ounce, up $15.20 from New York's notional close on Monday.
It hit a two-month high of $931 onFriday on a weak dollar before tumbling as investors sought cash to cover margin calls from losses in equities. "All the equity wealth has eroded and people are trying to keep normal funds to meet their day-to-day expenses," said Krishna Kumar Nathani, managing director of Indiabullion.com.
"Dealers are offering discounts of up to 60 rupees per gram on the international prices. Diwali sales won't be very good," said Nathani, referring to the Hindu festival of lights on Oct. 28.
Sales normally pick up in India ahead of the religious festivals, during which many weddings also take place. But buyers were hard to find, especially with gold prices on the Multi Commodity Exchange of India also holding near record after a recent decline in the rupee.
"People have no funds. Local gold prices are quoting below international prices by around 300 rupees per 10 grams," said Harmesh Arora, vice president of the Bombay Bullion Association.
"The sales are down to hardly 10 to 12 percent of normal sales," said Arora, adding that investors who had bought gold in early August at below $800 also booked profits. Gold jewellery forms an important part of a dowry as parents prefer to give gold to their daughters for financial security.
India devours 800 tonnes of the metal, more than 30 percent of annual global gold mine production, mostly as jewellery. "I guess the volatility in gold prices comes from factors other than physical buying or selling. The volatility is probably caused by fears and concerns in the financial markets," said Adrian Koh, analyst at Phillip Futures in Singapore.
"I am not too sure about the physical buying in gold but I guess they will be more careful on entering the markets." But physical dealers said jewellers snapped up gold at lower levels in other parts of Asia.
Premiums paid for physical gold supplies above spot London prices were steady at $1 and at 50 cents in Singapore and Hong Kong respectively.
"Demand is very good. Basically, everybody is calling up for physical gold, mostly from jewellers," said a dealer in Singapore.
Premiums rose to 50 cents in Tokyo as Japanese investors rushed to buy gold after a long weekend holiday. Gold bars were quoted at a discount of 50 cents last week.
"There's good demand for physical gold. In fact, some people bought gold at our shops even during the holiday," said a dealer at a main bullion trading house in Tokyo.
Comments
0 comment