Gold discounts in India hit 8-month high as record prices dampen demand

Gold discounts in India widened this week to their highest point in nearly eight months, as a surge in prices to a record high dampened demand, while customers in other key hubs also remained on the sidelines.

"Jewellers all over are seeing fewer customers. Demand's taken a big hit because of rising prices," said a Chennai-based bullion dealer.

Domestic gold prices hit a record high of Rs 87,886 per 10 grams on Thursday.

Indian dealers this week offered a discount of up to $39 an ounce over official domestic prices, including 6 per cent import and 3 per cent sales levies, up from a discount of $10 to $21 last week.

"Jewellers are not keen on building high-cost inventory at the end of the financial year, as they are busy closing accounts," said a Mumbai-based dealer with a bullion-importing bank. India's financial year runs from April until March 31.

India's gold imports are set to tumble 85 per cent in February from year-ago levels, reaching their lowest levels in 20 years, as demand is dampened by record-high bullion prices.

In China, the world's largest consumer, gold traded at a discount of $1 to an $18 premium over spot prices. Meanwhile, dealers in Hong Kong charged premiums ranging from par to $2 per ounce.

"China's market is wavering between a discount and a premium," Standard Chartered analyst Suki Cooper said in a note.

"The physical market has provided a weaker footing for gold ... China's markets have slowed amid high prices, underscoring the macro drivers."

In Japan, bullion was sold between a discount of $3 and a premium of $0.5, a trader said.

"The market has been choppy and volatile due to Trump's policies, and it seems investors stay on the sidelines till the trend is clear," said a Japanese trader.

In Singapore, gold traded between a $0.50 discount and a $3 premium, a trader said.