Discounts narrow in top hubs as gold price dip attracts some interest

By Brijesh Patel and Rajendra Jadhav

BENGALURU/MUMBAI (Reuters) – Physical gold demand limped higher in top Asian hubs this week, with dealers in India easing discounts to the lowest level in six weeks, as a drop in prices saw a little interest return in the precious metal.

Indian dealers offered discounts of up to $5 an ounce this week over official domestic prices, inclusive of 12.5% import and 3% sales levies, down from last week’s $23.

The correction just before the festival season could encourage jewellers to build up inventory, said a Mumbai-based dealer with a bullion importing bank.

In China, the biggest consumer of bullion, discounts narrowed to $40-$45 an ounce from last week’s $44-$48.

“We saw a little bit of buying interest when prices dipped to around $1,850-$1,860, but mostly on the investment side. The retail side is a bit better but still quiet,” said Ronald Leung, chief dealer, Lee Cheong Gold Dealers in Hong Kong.

Spot gold prices hit an over two-month low of $1,847.57 an ounce on Thursday and are down about 4.7% on a weekly basis. [GOL/]

In India, the second-largest gold consumer, discounts narrowed after local prices fell to an over two-month low.

“As prices are falling, retail buyers are postponing purchases anticipating an even bigger correction,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Singapore premiums remained around $0.80-$1.50 an ounce over the benchmark prices.

“On the retail side, we are seeing a lot more clients coming in and buying gold because they are still bullish on gold, so every time there is correction or pullback many clients are buying,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

In Japan, premiums rose to $0.50-$0.75 compared with $0.30-$0.50 last week.

In Bangladesh, domestic rates were slashed with the best quality gold priced at 74,008 taka ($874.49) per Bhori, or 11.664 grams, tracking global prices amid weak demand.

($1 = 84.6300 taka)

(Reporting by Brijesh Patel, Eileen Soreng and Swati Verma in Bengaluru, Rajendra Jadhav in Mumbai and Ruma Paul in Dhaka; editing by David Evans)

Source Article