ReutersHigher Prices Limit Retail Purchases in India: Merchants
Higher Prices Limit Retail Purchases in India: Merchants
Physical gold demand in key consumer China was subdued this week as COVID-induced containment dampened sentiment, while discounts in India slipped to their lowest level in two months on a slight improvement in demand and lower scrap supply.
“Demand (in India) is slowly improving, but higher prices are acting as a major deterrent for retail buyers,” said Mukesh Kothari, director of bullion dealer RiddiSiddhi Bullions in Mumbai.
This week, traders offered rebates of up to $12 an ounce from official domestic prices, including 10.75% import and 3% sales taxes, less than last week’s $40 rebates.
Discounts are falling due to lower imports in March and as the flow of old jewelry and coins or scrap stockpiles has slowed this week, a Mumbai-based precious metals trader at a private bank said.
“(However) higher prices could spoil demand during the upcoming festivals and wedding season,” the trader said.
In China, discounts of $4.25 to $6 an ounce were offered versus global benchmark spot rates. Last week, Chinese traders were selling gold anywhere between a $3 discount and a $2 premium.
“With this severe lockdown in both Hong Kong and Shanghai, the metal is not moving significantly,” independent analyst Ross Norman said, adding, “Asian demand is very low at the moment and very weak.” China’s zero-COVID policy has put millions of people, including the financial hub of Shanghai, into lockdown, clogging highways and ports.
“Sentiment is pretty low over there, with lockdowns, house arrests and some shortages of essential supplies starting to develop,” said StoneX analyst Rhona O’Connell.
In Hong Kong, gold was selling at a discount of $1.80 at a premium of $0.80 an ounce, while in Singapore premiums were little changed this week at between $1.30 and $1.70 an ounce.
Meanwhile, gold in Japan changed hands between a $0.50 discount and a $0.50 premium, traders said.
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