Asia gold demand picks up, but the Indian market is still at a discount

Physical purchases of gold decline in India while other Asian hubs such as China, Hong Kong, and Singapore see a surge in demand.

Asian hubs had buyers pick up more physical gold 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 in the last 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 of up to $2 an ounce over official domestic prices – including 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.

Commerzbank analysts noted that India could import less gold this year as households may make a record-high amount of jewellery scrap available.

Gold was sold between $1 discounts and $6.50 premiums to global spot prices in China 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 of Greater China at MKS PAMP. Lower global prices and traders replenishing stocks after high off-take in the first quarter were also supporting demand in China, said Debajit Saha, an analyst at Refinitiv Metals Research.

In Hong Kong, gold changed hands at $1.50-$2.50 premiums over global prices, while Singapore saw $1.50-$3 premiums. Physical coin and bar demand is expected to rise in the price-sensitive markets across Southeast Asia, said independent analyst Ross Norman.

Courtesy: Economic Times