India's gold demand improves as prices retreat from all-time highs

India's gold demand improved in the second half of this week but remained lower than normal as prices retreated from all-time-high levels, while traders continued to offer discounts in China as activity remained lacklustre. 

"Demand has started to trickle in as prices come down, but many buyers remain on the sidelines," said a jeweller based in Ahmedabad, India. 

Domestic gold prices were trading around Rs 84,750  per 10 grams on Friday after hitting a record high of Rs 86,592 last week. 

Indian dealers this week offered a discount of $12-$27 an ounce over official domestic prices, inclusive of 6 per cent import and 3 per cent sales levies, down from the last week's discount of $35. 

"Supplies are tightening as there were hardly any imports by banks this month. Discounts are decreasing," said a Mumbai-based dealer with a bullion importing bank. 

India's gold imports are set to tumble 85 per cent in February from year ago levels to their lowest in 20 years. 

In top consumer China, gold traded on par to a $3 discount over spot prices. 

Meanwhile, China's total gold imports via Hong Kong in January fell 44.8 per cent m/m, its lowest since April 2022, while data suggested a reversal in flow of net gold imports, moving from China to Hong Kong. 

"There is virtually risk free profit in shipping bars to CME registered vaults in New York just now and this is draining physical liquidity from other markets," independent analyst Ross Norman said. 

In Singapore, gold traded anywhere between a $0.50 discount and a $3 premium, a dealer said. Dealers in Hong Kong offered gold between a discount of $1.8 and a premium of $2.3 per ounce . 

In Japan, bullion was sold between a discount of $6 and a premium of $1.5.Sales volume is larger than buybacks, as people are waiting for prices to dip before making purchases, a Tokyo-based trader said.

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