MUMBAI/BENGALURU (Reuters) - Demand for physical gold moderated this week in India as many jewellers held off on purchases ahead of the end of the country’s financial year to pay off advance taxes, while premiums in Singapore rose slightly on tight supplies.
“As just a few days are left in the current fiscal year, many consumers (jewellers) are paying advance tax,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
“Even next week demand will remain subdued and could improve in April,” Jain said.
The Indian financial year runs from April to March.
Dealers in the country were charging a premium of up to $1.5 an ounce over official domestic prices, down from last week’s $2 level. The domestic price includes a 10 percent import tax.
The market is in premium due to lower gold imports in February, said a Mumbai-based bullion dealer with a gold importing bank.
Gold imports in February fell 10.81 percent from the same period last year to $2.58 billion, trade ministry data showed earlier this month.
In Singapore and Hong Kong, physical demand remained soft, with global gold prices hitting three-week highs after the U.S. Federal Reserve kept interest rates unchanged at its meeting this week. Prices were on track for a third straight weekly rise.
In Hong Kong, premiums were little changed at 50 cents to $1.20, compared with 60 cents-$1.10 last week, while premiums in Singapore firmed up slightly to 60-80 cents over the benchmark prices from 60-70 cents last week.
“Suppliers don’t have many inventories here as they know that it will be difficult to sell. That has caused a slight increase in the premium,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
Top consumer China witnessed steady demand, with premiums hovering at around $14-$16, slightly firmed from last week.
China’s yuan climbed to an eight-month high against a weakening dollar on Thursday after the U.S. Fed ruled out an interest rate hike this year.
The strong yuan is driving gold demand in China, said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
A weaker dollar makes gold expensive for buyers in other currencies.
Gold was sold at par with global benchmark prices in Japan as buying interest was limited, said a trader in Tokyo.
Reporting by Swati Verm and K Sathya Narayanan and Nallur Sethuraman in Bengaluru and Rajendra Jadhav in Mumbai, editing by Louise Heavens