Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,926.5513.1
Stock Analysis, IPO, Mutual Funds, Bonds & More

Price dip lures some Indian buyers to gold as festival approaches

Dealers offered discounts of up to $8 an ounce on official domestic prices this week, the lowest since mid-June.

Reuters|
Oct 18, 2019, 08.23 PM IST
0Comments
Gold-5--Reuters

Commodity Summary
MCX

GOLD
BENGALURU/MUMBAI: Gold discounts in India narrowed to a four-month low this week as some consumers took advantage of a modest dip in domestic prices to buy bullion ahead of a festival next week, while other Asian hubs saw limited activity.

Dealers offered discounts of up to $8 an ounce on official domestic prices this week, the lowest since mid-June. They were offering a discount of $20 last week. The domestic price includes a 12.5% import tax and 3% sales tax.

Gold futures in India were trading around 38,050 rupees per 10 grams on Friday, having hit a record high 39,885 rupees last month. Prices are up more than 21% so far in 2019.

"Demand has been improving slowly due to Diwali, but still, jewellers are on the sidelines," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Gold is considered an intrinsic part of festivals and weddings in India and is a popular gift.

Usually jewellers build inventory ahead of Diwali, but this year, they're have not made big purchases after witnessing poor sales during the Dussehra festival earlier this month, a Mumbai-based dealer with a private bullion importing bank said.

India's gold imports plunged 68% year-on-year in September to their lowest in over three years as record domestic prices curbed retail buying.

Demand looked grim in other Asian hubs as high prices and an economic slowdown exacerbated by a U.S.-China trade war soured consumer appetite.

While global benchmark prices were on track to mark a small weekly decline, moving in an $1,476.65-$1,497.74 an ounce range, they have climbed about 16% so far this year.

In top consumer China, bullion was sold at a premium of $4.75-$5.25 per ounce, down from last week's $5-$8 range.

The Chinese economy is being hurt by the trade war and gold is too expensive for people to buy, said Ronald Leung, chief dealer at Lee Cheong Gold Dealers.

China's third-quarter economic growth slowed to its weakest pace in almost three decades.

In Hong Kong, which has been hit by political protests and the resultant damage to tourism and retail sales, premiums of $0.45-$0.55 were being charged versus $0.50-$1.30 last week.

Premiums in Singapore were at $0.50-$0.60 an ounce, compared with last week's $0.50-$0.80, with high prices likely to keep demand subdued, traders said.

"I don't think the festive season will give demand for physical gold much of a boost as prices are still quite high," a Singapore-based trader said adding, if the local currency doesn't strengthen, demand would stay muted.

Gold in Japan was sold at par with the benchmark, a Tokyo-based trader said, as bullion priced in Japanese yen was at elevated levels.

Also Read

Gold rate today: Gold gains as Moody's downgrades outlook on India

Gold Rate Today: Gold, silver edge lower on rise in risk appetite

Gold rate today: Gold, sliver lose sheen as market sentiments improve

Gold rate today: Gold, silver add gains as rupee strengthens

Gold rate today: Gold, silver trade lower as traders book profits

Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service