Indian gold prices switch back to a premium
Fri Jun 23 2017
Ramesh Sridharan (876 articles)

Indian gold prices switch back to a premium

BENGALURU/MUMBAI Gold traded at a premium to official domestic prices in India this week for the first time in about a month, while demand remained lacklustre elsewhere in Asia despite a drop in prices.

Spot gold fell to a five-week low this week at $ 1,240.75 an ounce, from a seven-month peak of $ 1,295.97 on June 6.

“While prices have fallen internationally, it hasn’t really translated too much in most regions as rates in local currencies remain higher,” said one dealer with a Singapore bank.

However, demand in India improved slightly, with dealers charging a premium of up to $ 1 an ounce over official domestic prices this week, against a discount of $ 3 last week. The domestic price includes a 10 percent import tax.

“Jewellers are now focusing on implementation of the GST (goods and services tax). They are not making new purchases,” said a Mumbai-based bank dealer with a private bank.

The GST will replace a slew of federal and state levies from July 1, transforming Asia’s third-largest economy into a single economic zone with common indirect taxes.

China registered a slight improvement in demand compared with last week, but buying sentiment remained weak overall, traders said.

Prices below $ 1,250 an ounce induced some small-scale buying, according to Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

The premium, however, remained unchanged from last week at $ 8 to $ 10 an ounce.

“In China consumer sentiment is weak. People are not spending money and also looking to fashion jewellery rather than investment-driven purchases,” said Cameron Alexander, an analyst with Thomson Reuters-owned metals consultancy GFMS.

“While demand for 24-carat jewellery has come down heavily, it is strong for 18-carat. However, the overall market is weaker.”

Gold was selling at a premium of $ 1 in Singapore, between 50 cents and $ 1 in Hong Kong and 50 cents in Tokyo — all unchanged from last week.

 

Ramesh Sridharan

Ramesh Sridharan

Ramesh Sridharan is our Stock Market Correspondent covering events and daily movements of stock markets in Asia. He is based in Mumbai

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