June 23, 2017 / 11:29 AM / a month ago

Indian gold prices switch back to a premium

A salesperson attends to a customer (not pictured) inside a jewellery showroom, during Akshaya Tritiya, a major gold-buying festival, in Mumbai, India April 28, 2017.Shailesh Andrade/Files

BENGALURU/MUMBAI (Reuters) - 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.

Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by David Goodman

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