Gold at discount price for Continuous fourth week in India
Gold prices in India continued to trade at a discount for a fourth straight week, while premiums in China fell before it went on a week-long national holiday, in signs of sluggish demand in top consuming region Asia.
According to Reuters, Persistent weakness in India and China, which together account for about half of global demand, could add more pressure on gold prices, already reeling from a looming U.S. interest rate hike. In India, retail demand dwindled due to the start of Shradh (Mahalaya Pakshams), a two-week period considered an inauspicious time to buy gold, property or any big purchases.
Demand was also reduced by a weak monsoon that has eroded farmers’ income. Two-thirds of Indian gold demand comes from rural areas, where jewellery is a traditional store of wealth. “Prices are attractive, but retail demand has moderated due to the start of Shradh,” said Kumar Jain, vice-president of the Mumbai Jewellers Association.
Discounts remained steady from last week at $6-$8 an ounce to the global benchmark. “Local refiners are aggressively selling due to duty advantage they are getting on dore import,” said a Mumbai-based bullion dealer with a private bank. A lower import duty of 8.24 percent on dore, versus the 10.30 percent on refined gold, is helping refiners offer a bigger discount than banks, he said.
There is an oversupply in the precious space, according to a dealer with a bullion bank in Hong Kong. “There was a lot of enthusiasm earlier with the price drop but now not so much. Physical demand is subdued so we are in a situation where we are stuck with the metal,” he said. However, things could pick up as the fourth quarter is a seasonally strong period for gold demand in both the countries. Meanwhile, in Hyderabad, 10 grams Gold price is Rs 26,350, on Friday, and according to local jewelers, the price of 24 carat gold may slightly comedown within a couple of days, and they are anticipating that it will rise again during Deewali.
