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Physical gold dealers in India offered discounts for a fourth consecutive week as consumers shied away from making purchases due to higher domestic prices, while top consumer China also saw muted demand.
In India, this week, dealers offered a discount of up to $9 an ounce over official domestic prices — inclusive of the 15% import and 3% sales levies, up from last week’s discount of $5.
“The market was cruising along pretty nicely in the first half of October, but then the price hike came along and threw a wrench in the works. Now, we’re seeing demand lower than usual,” said Amit Modak, CEO at jeweller PN Gadgil and Sons, in the city of Pune.
Local gold prices jumped this week to 61,539 rupees ($739.01) per 10 grams, not far from the all-time high of 61,845 rupees ($742.68) hit in May.
Jewellers have become pessimistic about demand during the upcoming Diwali festival due to the price rise and are hesitant to make purchases, said a Mumbai-based dealer with a private bullion importing bank.
High prices could dampen demand in India during peak festival season and lead to the lowest purchase volumes in three years, the World Gold Council (WGC) said on Tuesday.
In China, premiums over global spot prices were quoted at $25-$40 per ounce, little changed from last week.
“Despite various easing measures, such as controlling the lease of import quotas, gold imports remain sluggish. The issue lies in the fact that demand is not substantial enough to drive a higher premium,” Bernard Sin, regional director of Greater China at MKS PAMP, said.
In Japan, gold was sold between a discount of $0.25 and a premium of $1 versus last week’s premium of $0.5-$1.
In Hong Kong, bullion was sold at premiums of $1.5-$2.5 per ounce and $1.50-$2.50 in Singapore.
($1 = 83.2420 Indian rupees)
(By Rajendra Jadhav and Anjana Anil; Editing by Shweta Agarwal)
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