This week, physical gold dealers in India had to offer discounts as record high prices dampened demand ahead of a key festival, while top consumer China narrowed its discounts.
In India, domestic prices hit a record high of 77,641 rupees ($923.85) per 10 grams. This represents an increase of more than 15% from a four-month low of 67,400 rupees recorded in July.
“The ongoing price rally is slowing down the demand. Consumers are buying less volume because they need to allocate far more money if they want to buy the same volume they planned with the rising prices,” said Bachhraj Bamalwa, partner at Indian jewellery retailer Nemichand Bamalwa & Sons.
Indian dealers offered a discount of up to $8 an ounce over official domestic prices, – inclusive of 6% import and 3% sales levies, versus last week’s $3 premium.
“Jewellers aren’t feeling too confident about Diwali sales this year due to rising gold prices. To keep customers interested, many are offering discounts on jewellery making charges to help boost their sales during the festive season,” a Mumbai-based bullion dealer with a private bank said.
Indians will celebrate Diwali in late October, when buying gold is consider auspicious. However, high prices dampened demand of buying gold this season, leading to increased discount offers from dealers.
Also See: India Struggles over Financially Inclusive Economy without Generating Fresh Bad Loans
China’s Gold Demand Faces Challenges
Chinese dealers narrowed discounts to $3-$14 below international spot prices , from $15-$31 discounts quoted last week. In Hong Kong, dealers sold gold at prices ranging from a $2 discount to a $1.20 premium.
Recently, China has sharply ramped up policy stimulus, but markets are waiting for a clearer road map on economic recovery.
Retail gold demand in China has taken a hit this year amid sky-high prices and economic slowdown.
Chinese demand unlikely to recover in the next three months as prices will rise further, said Peter Fung, head of dealing at Wing Fung Precious Metals, Hong Kong.
Hong Kong leader John Lee on Wednesday pledged to promote the development of world-class gold storage facilities in the region.
In Singapore, gold was sold between discount $0.80 to $2.20 premium.
This news is sourced from Reuters and is intended for informational purposes only.
