Gold dealers in India have been offering a discount due to plentiful supplies and slack demand during the wedding season, with other regions in Asia expecting improvement in buying ahead of the Christmas and Chinese New Year festivities.
According to a Reuters report, dealers in India offered a discount of up to $2 an ounce on official domestic prices, compared to a premium of $1 a couple of weeks ago. Domestic prices of gold in India include 12.5% import tax and 3% sales tax.
Demand is modest from jewellers, but there is ample supply from refiners that are aggressively selling in the market. India’s gold imports in November jumped 78% from a month earlier to the highest level in five months as jewellers in the world’s second-biggest market for the metal restocked after a fall in prices.
Assuming good demand during wedding season, banks and refiners have raised imports in the last few weeks. Weddings are one of the biggest drivers of gold purchases in India as bullion in the form of jewellery is a popular gift.
Demand is expected to recover in top consumer China, where traders charged premiums of $4-$6 an ounce over benchmark prices from $4-$5.5 last week. The Chinese new year beginning on Jan. 25 is expected to lift demand starting the end of December. The Chinese festival is also expected to improve demand in Singapore, with many retailers offering promotions for bullion.
International benchmark spot gold prices were on track for their biggest weekly gain since late-October. Sellers in Singapore charged premiums of $0.60-$0.80 an ounce over the benchmark, versus last week’s $0.60-$0.70. Premiums in Hong Kong rose to $0.50-$0.60 an ounce from $0.30-$0.55 in the prior week, amid ongoing unrest in the Chinese-ruled city. In Japan, gold was sold at a premium of $0.50, the same as last week.