MUMBAI/BENGALURU (Reuters) - Gold demand slowed in India this week as buyers postponed purchases on expectation of a cut in import duty and after a rebound in prices, while it was tepid across other major trading centres in Asia.
In India, the world’s second-largest consumer of the metal, dealers were charging a premium of up to $2 an ounce this week over official domestic prices that include a 10 percent import tax. The premiums were at $1 last week.
“Buyers are anticipating a cut in import duty in the budget. That is prompting them to delay purchases,” said Daman Prakash Rathod, director at wholesaler MNC Bullion in the southern Indian city of Chennai.
The Indian government will present on Feb. 1 its budget for the 2017/18 financial year starting on April 1.
The bullion industry has urged the government to cut the import duty to combat smuggling, which has increased since India raised the levy to 10 percent in August 2013 in a bid to narrow its current account deficit.
A senior government official said earlier this month that the trade ministry has requested the finance ministry to cut the import duty to 6 percent.
“Investors are also confused due to volatility in prices,” said a Mumbai-based dealer with a private bank. “Investment demand has fallen substantially since the government banned higher-value currency notes.”
Gold was trading around 28,665 rupees per 10 grams on Friday. It fell to 26,862 rupees last month, the lowest level since Feb. 2, 2016.
International gold prices were broadly steady on Friday, with spot gold on track for its fourth straight weekly gain, buoyed by a weaker dollar ahead of the inauguration of Donald Trump as U.S. President. [GOL/]
In top consumer China, demand slowed on higher prices, a trader with a Chinese import bank said, causing premiums to shrink to $14 from $17 earlier this week.
In Hong Kong and Singapore, premiums were quoted at around $1 - $1.30 an ounce, largely unchanged from last week.
“Whenever prices go up over $1,190-$1,200, demand starts to slow down. Towards the Chinese New Year, the demand is usually sluggish and that’s been the case this time,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Prices in Tokyo were at a discount of 50 cents this week compared with a discount of $1 last week.
“Industrial demand picked up ahead of the Chinese New Year. However, we have seen more buybacks from dealers due to higher prices in Japan,” a Tokyo-based trader said.
Additional reporting by Nallur Sethuraman in BENGALURU; Editing by Biju Dwarakanath
Our Standards: The Thomson Reuters Trust Principles.