Gold demand in India tepid on price volatility; China premiums narrow

Gold demand in India remained subdued this week, as buyers held back due to a sharp rise in ​prices and import duties, while premiums in top consumer ​China narrowed on cautious market sentiment.

Dealers in India quoted discounts of up to $106 ‌an ounce over official domestic prices this week, inclusive of 15% import and 3% sales levies, up from discounts of up to $78 an ounce last week.

"Jewellery stores are reporting very low footfall these days. Retail consumers are struggling to understand price trends and are preferring to stay on the sidelines," said a Chennai-based bullion dealer.

Domestic gold prices were trading higher on Friday after falling to 153,451 rupees per 10 grams in the previous session, their lowest level in a fortnight.

 

"Sentiment in the market is very weak after the government increased import duty. ‌Jewellers are extra cautious and are not willing to build stocks," said a Mumbai-based dealer with a private bullion importing bank.

Earlier this month, the South Asian country raised import tariffs on gold and silver to 15% from 6%.

In top consumer China, bullion traded at premiums of $9 to $12 an ounce over the global benchmark price, narrowing from premiums of $10 to $20 last week.

"Premiums in China are still somewhat steady, but not as ​many people want to buy at the moment as the conflict in the Middle East is ‌still uncertain, so people would like to see what happens next," said Peter Fung, head of dealing at Wing Fung Precious Metals.

Spot gold was headed for ​a third ‌consecutive monthly loss, after falling to a two-month low of $4,365.76 on Thursday before closing higher ‌on reports of a possible U.S.-Iran ceasefire extension.

A good support level will be $4,360, Fung said. "I think from here, some more buying interest should come in the ‌market."

In ​Hong Kong, gold traded ​at par to premiums of $1.80, while in Japan, gold was sold at a discount of $0.50. In Singapore, gold was sold at a discount of $0.25 ‌to a premium ​of $3.50.