Demand picks up, but Indian market still at discount

Buyers picked up more physical gold in most Asian hubs this week as domestic prices eased, but dealers in India continued to offer discounts while jewellers trimmed their inventory on doubts over demand in coming months.

Indian gold prices fell to 58,661 rupees per 10 grams earlier this week, the lowest since in 11 weeks.

“Demand has been improving at a lower price level, but it’s still lower than normal. Many buyers are on the sidelines,” said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in Kolkata.

Dealers offered discounts (XAU-IN-PREM) of up to $2 an ounce over official domestic prices — inclusive of 15% import and 3% sales levies — slightly lower than last week’s $5 discounts.

Jewellers, uncertain of demand in coming months, have been running operations with thin inventories, said a Mumbai-based dealer with a bullion importing bank.

India could import less gold this year as households may make a record high amount of jewellery scrap available, Commerzbank analysts said in a note.

In top consumer China, gold was sold at anywhere between $1 discounts and $6.50 premiums (XAU-CN-PREM) to global spot prices, versus $3 discounts-$3 premiums last week.

Demand has improved and a steady local currency contributed to the higher premiums, said Bernard Sin, regional director, Greater China at MKS PAMP.

Sin added that China, meanwhile, had not issued any fresh quotas to import gold.

Recent stimulus measures were also expected to support sentiment.

Lower global prices, along with traders replenishing stocks after high off-take in the first quarter were also supporting demand in China, said Debajit Saha, analyst at Refinitiv Metals Research.

In Hong Kong, gold changed hands at $1.50-$2.50 premiums over global prices (XAU-HK-PREM) while Singapore saw $1.50-$3 premiums (XAU-SG-PREM).

Physical coin and bar demand is expected to rise in the price-sensitive markets across Southeast Asia, said independent analyst Ross Norman.

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Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600

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