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India gold discounts widen to most in two months; demand up elsewhere

Reuters  |  MUMBAI/BENGALURU 

By Rajendra and Verma

MUMBAI/BENGALURU (Reuters) - Gold discounts in widened to the highest level in nearly two months this week due to sluggish demand amid high local rates, while buying in other major Asian centres ticked up as global prices slid to 2018 lows.

Dealers in were offering a discount of up to $4 an ounce over official domestic prices this week, the most since March 24. Last week, the discounts were at $1 an ounce. The domestic price includes a 10 percent import tax.

"Jewellery showrooms are witnessing lower footfalls in the last few days. It is forcing them to slash purchases," said Ashok Jain, of Mumbai-based

In the overseas market, gold prices have corrected but in the local market prices are still elevated due to a depreciating rupee, Jain said.

The rupee has fallen more than 6 percent so far in 2018, having plunged to its lowest in 16 months this week.

In the Indian market, gold futures were trading around 31,026 rupees per 10 grams, not too far from last month's 31,620 rupee level, a peak since August 2016.

"Demand will remain subdued in coming weeks unless prices fall sharply in Indian rupee terms," said a Mumbai-based with a private bullion importing

In top consumer China, demand for physical gold improved, with premiums of $8-$9 an ounce being charged over the benchmark price, versus $6-$8 last week.

Premiums of 60 cents to $1.30 an ounce were being charged in Hong Kong this week, little changed from the 50 cents-$1.50 range last week.

"Physical gold demand is slightly better than it was when prices were above $1,300," said Ronald Leung, chief at Lee Cheong Gold Dealers in Hong Kong.

Benchmark spot gold has declined about 2 percent so far this week, having touched a 4-1/2-month low of $1,285.41 per ounce on Thursday.

"Physical demand was much better this week than we have been seeing... we saw good demand especially on the wholesale side," said Brian Lan, at GoldSilver Central in

"As prices breached the key psychological $1,300 level for the first time this year… many investors and even businesses are looking to buy anything below that level."

In Singapore, premiums inched up to 90 cents an ounce, as against 80 cents last week.

"Demand picked a bit, but not as quick as it should have been... price in local currencies is still quiet high," said a

In Japan, gold continued to be sold flat versus the global benchmark, but "demand picked up in the middle of this week when prices fell," said a

(Reporting by Rajendra in and Verma in Bengaluru; Editing by Keith Weir)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, May 18 2018. 16:22 IST
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