|Delayed - 06/23 12:33:07 pm|
Festival gold buying spree continues in India, Chinese discounts narrow
|11/20/2020 | 09:45am|
BENGALURU/MUMBAI (Reuters) - A festival-led buying spree continued in India's retail gold market this week, though premiums eased slightly from a week ago and sales volumes were seen as lower year-on-year.
Discounts in top consumer China narrowed further meanwhile even as demand remained relatively muted.
Indians celebrated the festival of Diwali this week, following Dhanteras on Nov. 13.
"Jewellery showrooms have been witnessing higher footfalls for the last few days. Retail jewellery demand has improved," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
Dealers charged premiums of about $2 an ounce over official domestic prices, inclusive of 12.5% import and 3% sales levies, down from $4 last week.
Though buyers were seeking out gold, "overall demand is still expected to be down year on year by 10%-30% in tonnage terms, though it may be stronger in U.S. dollar terms", Standard Chartered said in a note.
On Friday, local gold futures were trading around 50,083 rupees per 10 grams, still at historically elevated levels but more than 10% below the all-time high of 56,191 rupees they hit in August.
The correction lured back many buyers who had been put off by higher prices, said a Mumbai-based dealer with private bullion importing bank.
In Singapore, physical gold was sold at a premium of $1.40 an ounce over international spot prices.
While retail demand remains strong as prices consolidate, some investors are also taking advantage of lower prices, said Vincent Tie, sales manager at Silver Bullion.
In China, discounts eased to $10-$16 an ounce from $18-$26.55 a week ago, which dealers attributed to fluctuations in currency exchange rates.
Prices in China have remained at a discount to global spot rates for much of the year as the coronavirus pandemic choked demand.
But demand is still muted and "people do not have much money to invest in jewellery and other gold items", said Peter Fung, head of dealing at Wing Fung Precious Metals.
"If spot prices cross the $1,850 (level), there would be some demand growth."
Gold was sold on par with the benchmark spot rates in Japan.
(Reporting by Diptendu Lahiri, Eileen Soreng in Bengaluru and Rajendra Jadhav in Mumbai; Editing by Arpan Varghese and)
By Rajendra Jadhav and Diptendu Lahiri