Festival gold buying spree continues in India, Chinese discounts narrow
By Rajendra Jadhav and Diptendu Lahiri
BENGALURU / MUMBAI (Reuters) - A buying frenzy led by the festival continued this week in the Indian gold market for private customers, although premiums fell slightly compared to the previous week and sales volumes were lower year-on-year.
The discounts in the top consumer China have since continued to decline, although demand remained relatively subdued.
The Indians this week celebrated the festival from Diwali to Dhanteras on November 13th.
"Jewelry showrooms have seen more visitors in the past few days. Demand for retail jewelry has improved," said Ashok Jain, owner of Mumbai-based gold wholesaler Chenaji Narsinghji.
The dealers charged premiums of around $ 2 an ounce over official domestic prices, including 12.5% import and 3% sales taxes, compared to $ 4 last week.
Although buyers were looking for gold, "aggregate demand for tonnage is still expected to decline 10-30% year over year, although it may be stronger in US dollars," Standard Chartered said in a note.
Local gold futures were trading at around 50,083 rupees per 10 grams on Friday, still at historically high levels but more than 10% below the all-time high of 56,191 rupees they hit in August.
The correction lured back many buyers who had been put off by higher prices, said a Mumbai-based trader with a private bullion import bank.
In Singapore, physical gold was sold at a premium of $ 1.40 per ounce over international spot prices.
While retail demand remains strong due to price consolidation, some investors are also taking advantage of lower prices, said Vincent Tie, director of sales at Silver Bullion.
In China, discounts fell from $ 18 to $ 26.55 a week ago to $ 10 to $ 16 an ounce, which traders attributed to exchange rate fluctuations.
Prices in China remained at discount to global spot rates for much of the year as demand for a coronavirus pandemic stifled demand.
But demand is still subdued and "people don't have a lot of money to invest in jewelry and other gold items," said Peter Fung, director of trading at Wing Fung Precious Metals.
"If spot prices cross the $ 1,850 (level) level, there would be some growth in demand."
Gold was sold at the level of reference rates in Japan.
(Reporting by Diptendu Lahiri, Eileen Soreng in Bengaluru and Rajendra Jadhav in Mumbai; editing by Arpan Varghese and)
In this article
GC = F.
ZG = F.
SI = F.
ZI = F.
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