MUMBAI/BENGALURU (Reuters) - Gold discounts in India narrowed this week on an improvement in demand for weddings and hopes that retail purchases will rise next month on account of a key festival, while demand in the rest of Asia remained subdued due to higher prices.
Dealers in India were offering a discount of up to $3 an ounce over official domestic prices this week, down from $7 discount last week, the highest in 6-1/2 months. The domestic price includes a 10 percent import tax.
“Retail buyers are making purchases for weddings. This will gain momentum in coming weeks,” said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in Chennai.
Gold is an essential part of the bride’s dowry in India and also a popular gift from family and guests at weddings.
“We are approaching peak demand season, but the price rise is a bit of a dampener,” said a Mumbai-based dealer with a private bank.
In the local market, gold futures closed at 30,521 rupees ($468) per 10 grams on Wednesday, not far from a 16-month high of 30,950 rupees hit last week.
Jewellers will increase purchases in the coming weeks for next month’s Akshaya Tritiya festival, when buying gold is considered auspicious, the bank dealer said.
India’s gold imports in February dropped a quarter from a year earlier to 63 tonnes as higher prices curtailed demand in the world’s second-biggest consumer of bullion.
Spot gold hit $1,356.66 per ounce on Tuesday, its highest since Feb. 16, but slipped more than 2 percent in the next couple of days as the dollar drew strength from U.S. economic growth data and easing trade war fears.
Premiums in top consumer China were mostly unchanged from last week at $8 an ounce.
“Gold prices were high and we saw more selling... We see some physical demand but not as much as when prices were lower,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
Premiums of 60 cents to 80 cents were being charged in Singapore. In Hong Kong, premiums slipped to a range of 60 cents to $1.20 an ounce as compared to $1 to $1.50 an ounce last week.
“People are waiting for right kind of prices as it has been very volatile this week. If they break below $1,300, we could see some demand coming in,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Premiums in Japan fell to 25 cents an ounce compared with 50 cents last week.
($1 = 65.1650 Indian rupees)
Reporting by Swati Verma, Nallur Sethuraman in Bengaluru and Rajendra Jadhav in Mumbai; Editing by Amrutha Gayathri