Indian Gold Dealers Offer Discounts For First Time In Six Weeks As Buying Slows

BENGALURU/MUMBAI: Physical gold in India was sold at a discount for the first time in six weeks as a rebound in local prices to a one-month peak squeezed demand, while purchases slowed in other Asian hubs ahead of the year-end holidays.

India’s local gold futures jumped to 50,642 rupees per 10 grams on Thursday, the highest level since Nov. 18.

“Demand is very subdued. Retail buyers are postponing purchases because of a price rise,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Dealers were offering a discount of up to $1 an ounce over official domestic prices this week, inclusive of a 10 percent import tax and 3 percent sales tax, down from last week’s premium of $2.5.

In China, discounts of $16-$20 an ounce were being offered compared with last week’s range of $19-$24, while gold was being sold at a premium of around $0.50 cents in Hong Kong.

“It’s the year-end and jewellers are trying to finish the inventories and they have adequate, so they are not making any new purchases,” said Dick Poon, general manager at Heraeus Metals Hong Kong Ltd.

China, traditionally the world’s biggest consumer of gold, saw a sharp drop in gold consumption due to the coronavirus pandemic, forcing bullion sellers to offer steep discounts in the past few months.

“China is still fighting the aftermath of the virus… People are too cautious to spend their savings right now,” said Ronald Leung, chief dealer for Lee Cheong Gold Dealers in Hong Kong.

Physical gold in Singapore was being sold at a premium ranging from 80 cents to $1.30 an ounce over the global benchmark prices, compared with premiums of about $1.20 an ounce last week.

Demand remained subdued in Japan, traders said, with gold being sold between flat and a $0.50 premium to benchmark prices.

Spot gold prices were on track for their third straight weekly gain, having hit a one-month high of $1,895.81 on Thursday.

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