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Asia Gold: Key festivals light up Indian demand

Reuters  |  MUMBAI/BENGALURU 

By and Karen Rodrigues

MUMBAI/BENGALURU (Reuters) - Demand for physical gathered steam during a key festival week, shrugging off a recent downtrend going into the traditional busy wedding season, while other major Asian hubs saw limited activity.

India, the second biggest bullion consumer after China, celebrated the Dhanteras and Diwali festivals this week, when buying is considered auspicious.

"We were initially sceptical about Diwali demand but it jumped this week, despite higher prices," said Harshad Ajmera, the of JJ House, a in the eastern Indian city of

Local gold prices have eased about 3 percent after touching their highest level in five years in late October.

The price rise gave confidence to consumers that gold will provide better returns than other asset classes in coming years and prompted them to increase purchases, said Saurabh Gadgil, of

Dealers in were offering discounts of up to $3 an ounce, the lowest in six weeks, over official domestic prices compared with the $7 discounts last week. The domestic price includes a 10 percent import tax.

Jewellers were reporting better Diwali sales than last year in almost all regions, said Nitin Khandelwal, the of All Gems & Jewellery Domestic Council.

"Demand will remain robust even in coming weeks as the festive season will be followed by a wedding season."

Meanwhile, global benchmark spot gold prices were on track for an about 1 percent decline for the week, which would be its biggest weekly fall since mid-August, but the dip did little to trigger fresh buying elsewhere in

In China, premiums were at $4-$6 per ounce, little changed from $4-$7 last week.

"Demand is still not good as the dollar is strong," said Ronald Leung, chief dealer, at Lee Cheong Gold Dealers in Hong Kong.

A higher greenback makes it more expensive for holders of other currencies to buy gold, which is priced in dollars.

Physical demand in slowed a little as some wholesalers had already restocked their inventories in the last two weeks, said Samson Li, a Hong Kong-based senior analyst at GFMS.

Premiums in Hong Kong were unchanged at $0.70 to $1.50 an

In Singapore, premiums of $0.60-$0.90 an were charged over the benchmark, against $0.60-$1 previously.

"Demand was strong this week in Early in the week, there was noticeable buying activity for the Diwali festival," said Ronan Manly, analyst at Singapore-based dealer BullionStar.

Premiums in were flat for the eighth consecutive week, a said.

(Reporting by in Mumbai, Eileen Soreng and in Bengaluru; editing by and David Evans)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, November 09 2018. 18:41 IST
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