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Money News

Gold price dip lures some buyers in India, demand sags elsewhere

(Reuters) - Retail demand for physical gold picked up slightly in India this week on a dip in domestic prices and a festival, but top bullion hubs across Asia saw muted activity.

FILE PHOTO: A salesman displays gold necklaces and earrings inside a jewellery showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in Mumbai, India, May 7, 2019. REUTERS/Francis Mascarenhas/File Photo

Local gold futures in India have retreated to about 50,875 rupees ($695.04) per 10 grams, an over 9% fall from a record 56,191 rupees last month.

Demand usually picks up in the state of Kerala during the festival of Onam, which was celebrated earlier this week.

However, “this year, Onam sales were far less than usual. The slowdown in the economy has reduced consumers’ purchasing power,” said B Govindan, chairman of Kochi-based Bhima Jewellery.

Dealers offered discounts of up to $40 an ounce over official domestic prices, inclusive of 12.5% import and 3% sales levies, easing from last week’s $43, a five-month peak.

In Singapore, premiums of $0.80-$1.50 were charged, Brian Lan of dealer GoldSilver said, adding buying came mostly from investors.

“Since prices are higher, people are looking for gold kept in their drawers to sell... The wedding season is not that great, (with) simple ceremonies, that’s why people have tightened their pockets.”

Chinese discounts eased to $56 per ounce against global spot prices from last week’s $60-$70, amid muted demand.

Gold has been sold at discounts since February in the traditional top buyer as the pandemic sapped consumer sentiment.

Demand is unlikely to pick up medium term, said Peter Fung, head of dealing at Wing Fung Precious Metals, adding lower global prices also did not help as the yuan strengthened.

Benchmark global spot rates were headed for a 1.3% weekly decline, but remained well above $1,900 an ounce. [GOL/]

Gold was sold at a $0.50 premium in Japan.

“It’s really incredible to see how fast silver ingots are sold out,” Haruka Matsuzaki of Tokyo-based retailer Tokuriki Honten said.

($1 = 73.1969 Indian rupees)

Reporting by Rajendra Jadhav in Mumbai, Arundhati Sarkar and Eileen Soreng in Bengaluru, addtional reporting by Brijesh Patel and Nakul Iyer; editing by Arpan Varghese and Krishna Chandra Eluri

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