Gold premiums in India slip on easing demand but still near $100

SINGAPORE Fri May 9, 2014 1:04pm IST

A saleswoman arranges a gold necklace inside a jewellery showroom in Kochi April 16, 2013. REUTERS/Sivaram V/Files

A saleswoman arranges a gold necklace inside a jewellery showroom in Kochi April 16, 2013.

Credit: Reuters/Sivaram V/Files

Related Topics

SINGAPORE (Reuters) - Gold premiums in India, the world's second biggest bullion consumer, slipped this week as demand eased on expectations of lower prices and relaxation in import curbs.

Premiums slipped to $100 an ounce over the global benchmark, from last week's $120-$130 an ounce, according to dealers.

India celebrated its second-biggest gold buying festival of Akshaya Tritiya last Friday, which along with prevailing wedding demand caused a sharp jump in premiums.

Gold is a popular gift at weddings in India, while Akshaya Tritiya is considered an auspicious day to buy gold for Hindus.

India imposed restrictions on gold imports last year to tighten its trade deficit, including a record 10 percent import duty, prompting scarce supplies and higher premiums.

But speculation that the rules could be eased after the national elections this month has grown.

"Jewellery demand is holding up to an extent but people have been putting off gold purchases on expectations that a new government will cut the duty and ease the rules," said Bachhraj Bamalwa, director with All India Gems and Jewellery Trade Federation, a grouping of more than 300,000 jewellers.

"If the rules are eased, premiums would drop sharply and consumers would rather wait for that," he said.

Bamalwa also said that Akshaya Tritiya sales were about 30 percent lower than last year as consumers were putting off big purchases.

In April 2013, gold prices fell over 10 percent in two days - the biggest such fall in 30 years. The sharp decline in prices sent consumers across Asia rushing to buy gold.

Prices, however, have been volatile since and are even lower than last year's level, making consumers more cautious.

Dealers across other parts of Asia also said demand was much lower than what they saw last year.

"It is a completely different story compared to last year," said a physical dealer in Hong Kong. "Demand is very subdued now as May and June are seasonally quite periods. Last year was unusual because of the price drop."

Earlier this week data showed that the Perth Mint's sales of gold coins and bars fell 79 percent in April from the year-earlier period, when sales hit an all-time high.

The dealer said this week's price drop below $1,300 an ounce failed to bring about aggressive buying.

Premiums in Hong Kong were between 80 cents and $1.20 an ounce, he said.

In top buyer China, premiums were about $3 an ounce, while those in Japan and Singapore were unchanged from last week's levels.

(Reporting by A. Ananthalakshmi; Editing by Anand Basu)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Market at Record

Market at Record

Sensex, Nifty hit record highs; reforms outpace hawkish Fed.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Samsung Results

Samsung Results

Smartphone woes drag Samsung Elec Q3 profit to more than 3-year low.  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage