Discounts on physical gold in India widened as scrap supply increased amid only slightly improved demand, while buying in leading consumer China held steady despite COVID-19 lockdowns as buyers sought safe haven assets.
Dealers were offering a rebate of up to $40 an ounce off official domestic prices – including 10.75% import and 3% sales taxes, versus last week’s $35 rebate.
The Gudi Padwa Festival, also known as Ugadi, was celebrated over the weekend but jewelers reported lower than normal sales, a Mumbai-based trader at a bullion importing bank said.
The flow of old jewelry and coins, also known as scrap stocks, has skyrocketed due to higher prices, which has reduced the need for imports, the trader said.
In China, gold prices have ranged between a $3 and $2 premium, compared to a $2 to $6 per ounce discount to benchmark global spot prices the previous week.
Because of the Ukraine crisis, people are still interested in buying gold as a safe haven, said Peter Fung, trading manager at Wing Fung Precious Metals.
Markets were quiet but traded steadily, with some major cities in place under COVID-19 restrictions.
In Hong Kong, gold has ranged between a discount of $3 and a premium of $2 an ounce to spot prices, while Singapore last week saw premiums of around $1.20 to $1.60 an ounce, from $1 to 1.80 $ per ounce.
“Investors may come to buy gold because it could be bullish longer term,” said Brian Lan, managing director of trader GoldSilver Central, adding that high inflation would boost demand.
In Tokyo, gold was sold at a discount of $1 at a premium of 50 cents.
