Price drop spurs India gold demand, buyers eye bigger dips
Mumbai-India (June 29) Gold demand improved this week in India as prices fell to their lowest level in nearly three months, while demand elsewhere in Asia remained tepid as investors waited for prices to fall further.
“There is modest rise in demand from jewellers, but still gold is trading at a discount,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.
Dealers in India were offering a discount of up to $2 an ounce over official domestic prices this week, compared with a premium of $1 last week. The domestic price includes a 10 percent import tax.
“Improving retail demand is giving jewellers some confidence. They are placing small orders,” said a Mumbai-based dealer with a private bullion importing bank, adding “falling rupee is still confusing some.”
Indian rupee hit a record low on Thursday, limiting the drop in local gold prices.
Gold imports into India, the world’s second biggest buyer of the metal, could drop by 18 percent in 2018 from a year ago, according to a Reuters poll.
Spot gold hit a more than six-month low this week at $1,250.98 per ounce, as demand for remained weak and as the dollar strengthened to near one-year highs.
In top consumer China, premiums were in a range of $2-$4 an ounce against the international benchmark, versus $5-$6 last week.
“The Chinese prices have been better than the international prices due to the yuan exchange rate ... Some are eager to buy low, but still waiting,” GFMS analyst Samson Li said.
China’s yuan hit a 7-1/2-month low of 6.6522 on Friday.
Premiums of 80 to 90 cents were charged in Singapore, little changed from the 80 cents-$1 range last week.
Demand has been quite good in Singapore because prices are at their lowest this year, said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
“Right now people who are buying gold are businesses. Some investors are waiting for prices to fall lower before they enter the market.”
Premiums in Hong Kong were unchanged from the previous week at 50 cents to $1.20.
In Japan, gold was being sold at a premium of 50 cents over benchmark spot, a 25 cent rise from the previous week, as bargain hunting increased demand for the metal.
