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The physical gold market in India flipped to a premium this week as a pullback in domestic prices boosted demand, while buying was lacklustre in other top Asian hubs.
Dealers in India this week were charging a premium of up to $1.5 an ounce over official domestic prices – inclusive of the 15% import and 3% sales levies – up from the last week’s discount of $2.
Indian local gold prices fell to 58,096 rupees per 10 grams on Friday, their lowest since March 16, before recovering to about 58,300 rupees.
“After a long time, jewellery showrooms are witnessing improvement in footfall. Retail buyers are making purchases,” said a dealer with a Mumbai-based bullion importing bank.
Jewellers were on the sidelines for the past few weeks, but this week, some jewellers started making purchases, said a New Delhi-based bullion dealer.
In top consumer China, gold was sold at anywhere between $1 discounts and $5 premiums to global spot prices , versus $1 discounts-$6.50 premiums last week as the Dragon Boat Festival holiday break kept buyers away.
“With China’s upcoming holidays, activity might slow down but if prices keep falling, I expect the buyers will jump back in,” said Joseph Stefans, Group Head of Trading at MKS PAMP.
“The hot Chinese gold demand we saw earlier this year has faltered … This raises questions as to whether that buying – especially in high-carat gold jewellery – was just a post-pandemic buying spree which has now run its course,” said independent analyst Ross Norman.
In Hong Kong, gold changed hands on par with global prices , said Stefans. In Singapore, gold traded between being flat and a $3 premium .
Retail demand has slowed even with lower prices, as investors adopt a wait-and-see approach in hopes of further drop, said Vincent Tie, sales manager at Singapore dealer Silver Bullion.
In Japan, bullion was sold anywhere between a $0.50 discount to a $0.50 premium.
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