January 6, 2017 / 10:56 AM / 7 months ago

Asia gold demand picks up as Indian wedding season drives fresh buys

Salespersons wait for customers at a gold jewelry showroom in Chandigarh, November 9, 2016.Ajay Verma/Files

MUMBAI/BENGALURU (Reuters) - Gold demand in Asia gathered some steam this week on wedding season purchases in India, with prices swinging to a premium there for the first time in over a month, and traders expecting demand to strengthen due to the upcoming Chinese New Year.

"The physical demand in Asia has been very good," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central, adding that premiums are also high due to a production shortage.

Dealers in India, the world's second-largest consumer of the metal, were charging a premium of up to $1 an ounce this week over official domestic prices, compared to a discount of up to $4 last week. The domestic price includes a 10 percent import tax.

"Cash supply is improving. Consumers are making purchases for weddings," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.

In November, Prime Minister Narendra Modi scrapped 500- and 1,000-rupee banknotes, or 86 percent of the value of cash in circulation, as part of a crackdown on corruption, tax evasion and militant financing.

"Banks and other agencies have reduced imports in the last few weeks. That's why despite moderate demand they could charge a nominal premium this week," said a Mumbai-based dealer with a private bank.

Gold imports in December fell 71 percent from a year ago to 31 tonnes as the cash crunch squeezed demand, said Sudheesh Nambiath, a senior analyst at GFMS, a division of Thomson Reuters.

In China, the world's top gold consumer, gold was sold at a premium of between $17 and $20 an ounce to the global benchmark, against a $20 to $22 premium in the previous week.

Traders are expecting a seasonally strong demand for yellow metal in China due to the upcoming Lunar New Year.

Gold on Friday slipped from the one-month high touched in the previous session on a surge in dollar, although bullion was on track to end the week about 2 percent higher.

Among other gold trading centres, bullion was sold at a premium of $1.40 an ounce in Hong Kong and Singapore, nearly unchanged from last week.

Prices in Tokyo, however, were at a discount of $1 per ounce this week.

($1 = 68.00 Indian rupees)

Additional reporting by Nallur Sethuraman in BENGALURU; Editing by Christian Schmollinger

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below