Gold demand in India slightly improves as prices slip; China premiums ease

Gold demand in India improved slightly this week as softer prices drew in jewellery buyers even as ​caution prevailed, while premiums in China eased.

Gold prices in India ​dropped to their lowest since April 2 at ₹146,444 per 10 grams ‌on Thursday, and are down 1.5 per cent for the week so far.

Demand improved as the recent price correction drew buyers back, particularly those for jewellery purchases, said Chanda Venkatesh, managing director at CapsGold, a bullion merchant based in the southern city of Hyderabad.

Dealers quoted discounts of up to $35 an ounce over official domestic prices, inclusive of 15 per cent import and 3 per cent sales levies, down from last week's discounts of up to $87.

While jewellers have started restocking, purchases remain measured as confidence in retail demand for the coming months is still weak, said a Mumbai-based ‌bullion dealer with a private bank.

Last month, the South Asian country raised import tariffs on gold and silver to 15 per cent from 6 per cent as part of efforts to ease pressure on foreign exchange reserves from higher oil prices.

India's physically backed gold exchange-traded funds logged their first net monthly outflow in a year in May, as investors booked profits following a sharp rise in prices triggered by higher import duties.

In top consumer ​China, bullion traded at premiums of $1 to $5 an ounce over the global benchmark price, down from $7 ‌to $10 premiums last week.

"The $4,000 mark for gold was a good support level, and hence we can see some fresh buying interest," said Peter Fung, head ​of dealing ‌at Wing Fung Precious Metals.

Spot gold hit an over six-month low of $4,022.29 on Thursday before ‌closing higher, and is on track for a weekly loss. [GOL/]

Meanwhile, China's central bank increased its gold reserves for a 19th month in May, data from the People's ‌Bank ​of China showed ​on Sunday.

In Hong Kong, gold traded between par and a $1.90 premium, while in Japan, it was sold at a discount of $0.50.

In Singapore, gold was ‌sold between a $0.50 ​discount and a $2 premium.