Festivities trigger gold buying spree, but volumes lag due to high prices

Gold demand in India jumped this week amid festival purchases, although volumes were lower than usual due to record-high prices.

"Retail buying jumped as consumers want to make purchases during the auspicious period. But many were making token-buys because of higher prices," said a Hyderabad-based jeweller.

In India, prices jumped to a record high of Rs 79,775 per 10 grams earlier this week, marking a nearly 33 per cent increase since last year's Diwali.

The share of coins and bars in total sales increased this year than usual as buyers were unwilling to pay increased making charges for jewellery, said a New Delhi-based jeweller.

Indian dealers earlier this week charged a premium of up to $1 an ounce over official domestic prices on Dhanteras, inclusive of 6 per cent import and 3 per cent sales levies, but offered a discount later in the week of up to $5, compared with last week's $4 discount.

"In volumes, sales were lower this year than last year. However, considering the price rally, even sales with modest volume drops look promising since, in value terms, they are much higher," said a Mumbai-based bullion dealer with a private bank.

Diwali and Dhanteras, celebrated this week, are festivals when buying gold is considered auspicious.

"It was a good sales week due to festivities after a long quiet period," said Brian Lan, managing director at GoldSilver Central.

In Singapore, gold was sold between $0.80 discount to $2.20 premium.

Demand for physical silver and platinum is rising in Singapore based on dealers' inventory, Hugo Pascal, precious metals trader at InProved, said.

Dealers in China offered discounts of $11-$14 .

China's gold consumption in the first three quarters of 2024 slid 11.18 per cent as high prices dented jewellery demand.

The ongoing challenges within the Chinese economy continue to impact consumer behaviour despite stimulus package, Pascal added.

In Japan, traders quoted at $0.25 discount to $0.5 premium.

There were some purchases and limited selling as people focused on protecting their assets, a Tokyo-based trader said.