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India Gold Discounts Hit Five-month High As Price Dip Fails To Stir Demand

India Gold Discounts Hit Five-month High As Price Dip Fails To Stir Demand

Dealers in India offered the highest discounts on gold in five months this week as a dip in domestic prices failed to revive demand, while in top consumer China prices remained at a sharp discount to the international market.

MUMBAI/BENGALURU: Dealers in India offered the highest discounts on gold in five months this week as a dip in domestic prices failed to revive demand, while in top consumer China prices remained at a sharp discount to the international market.

In India discounts of $43 an ounce were offered over official domestic prices, the highest since the last week of March, versus $20 discounts last week. The domestic price includes a 12.5% import and 3% sales taxes.

“When prices were rising, at least investors were making purchases anticipating a further rise. As prices are now correcting due to a strong rupee, they’re taking a pause,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

On Friday, local gold futures traded around 51,200 rupees ($699) per 10 grams, having retreated from a record 56,191 rupees hit earlier this month.

A Mumbai-based dealer with a bullion importing bank attributed the higher discounts to rising scrap supplies amid low demand.

Chinese discounts eased to $60-$70 an ounce against international spot gold rates, which traded in a $1,902.22-$1,976.03 range, from last week’s $80-$70.

While demand may pick up later this year, prices will remain at discounts, said Samson Li, a Hong Kong-based analyst at Refinitiv GFMS, adding selling had slowed relatively.

Chinese discounts hit a record $75-$100 earlier in August.

Only investment demand picked up slightly, said Peter Fung, head of dealing at Wing Fung Precious Metals.

In Hong Kong, gold was sold at anywhere between a discount of $0.50 to a $1.50 premium over global prices.

Premiums of $1-$1.50 were charged in Singapore, with buyers taking advantage of price dips earlier this week.

“Quite a few refineries and mints are still not fully operational. In addition to the fact that commercial flights are still halted, there is a shortage in physical silver products,” said Zvika Rotbart, South East Asia business development executive at J. Rotbart & Co.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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  • First Published: August 28, 2020, 6:52 PM IST
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