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Gold Sold at Discount in India as Wedding Demand Disappoints

Dealers in India offered a discount of up to $2 an ounce on official domestic prices, compared to a premium of $1 last week. Domestic prices include 12.5% import tax and 3% sales tax.

Reuters

Updated:December 13, 2019, 7:37 PM IST
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Gold Sold at Discount in India as Wedding Demand Disappoints
Representative image.

Bengaluru/Mumbai: Gold dealers in India offered a discount this week due to plentiful supplies and slack demand during the wedding season, with other regions in Asia expecting improvement in buying ahead of the Christmas and Chinese New Year festivities.

Dealers in India offered a discount of up to $2 an ounce on official domestic prices, compared to a premium of $1 last week. Domestic prices include 12.5% import tax and 3% sales tax.

"Demand is modest from jewellers, but there is ample supply from refiners that are aggressively selling in the market," said Harshad Ajmera, a gold wholesaler in Kolkata.

India's gold imports in November jumped 78% from a month earlier to the highest level in five months as jewellers in the world's second-biggest market for the metal restocked after a fall in prices.

"Assuming good demand during wedding season, banks and refiners have raised imports in the last few weeks," said a Mumbai-based dealer with a private bullion importing bank.

Weddings are one of the biggest drivers of gold purchases in India as bullion in the form of jewellery is a popular gift.

Demand is expected to recover in top consumer China, where traders charged premiums of $4-$6 an ounce over benchmark prices from $4-$5.5 last week.

"Demand has dried up compared to last week, but is still higher than late last month and earlier this month," said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.

The Chinese new year beginning on Jan. 25 is expected to lift demand starting the end of December, he added.

The Chinese festival is also expected to improve demand in Singapore, with many retailers offering promotions for bullion, Silver Bullion sales manager Vincent Tie said.

Sellers in Singapore charged premiums of $0.60-$0.80 an ounce over the benchmark, versus last week's $0.60-$0.70.

"If (benchmark) prices come down a little bit, we will see some buying on the wholesale side," said Brian Lan, managing director at Singapore dealer GoldSilver, adding that lower prices would also support demand during Christmas.

International benchmark spot gold prices were on track for their biggest weekly gain since late-October.

Premiums in Hong Kong rose to $0.50-$0.60 an ounce from $0.30-$0.55 in the prior week, amid ongoing unrest in the Chinese-ruled city.

"The shops are still opening, but people visit less," said Dick Poon, general manager, Heraeus Metals Hong Kong Ltd.

In Japan, gold was sold at a premium of $0.50, the same as last week.

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