March 13, 2020 / 12:58 PM / 22 days ago

Virus stifles activity in gold trading hubs, discounts deepen

BENGALURU/MUMBAI (Reuters) - Physical gold markets in major Asian hubs this week reeled from the impact of the coronavirus outbreak and dealers offered deeper discounts in top consumer China.

FILE PHOTO: A salesperson arranges 24K gold bracelets for Chinese weddings at Chow Tai Fook Jewellery store in Hong Kong, China December 14, 2017. REUTERS/Tyrone Siu/File Photo

“The physical market in Hong Kong is quiet. We’re only seeing investment-side buying. China is also the same,” Ronald Leung, chief dealer, Lee Cheong Gold Dealers in Hong Kong, said.

Discounts of up to $10 an ounce were offered in China this week compared with last week when gold was sold level with the benchmark.

In Hong Kong, premiums of $0.30-$1.20 an ounce were charged, versus last week’s premiums of $0.30-$1.

“Physical demand is weak. Prices have become more volatile because more speculators are in the market, making bets for a living now,” Samson Li, Hong Kong-based precious metals analyst at Refinitiv GFMS, said.

Benchmark spot gold had a volatile week, ranging between $1,702.56 an ounce and $1,551.

Prices were on course for their biggest weekly decline in more than three years as panic-selling in wider markets in response to growing fears over the coronavirus pandemic infected the mood on the precious metals markets.

In Japan, gold was sold at between a $0.50 premium and a $0.30 per ounce discount.

Activity has been slow, in terms of both buying and selling, a Tokyo-based dealer said, asking not to be named.

In Singapore, premiums were quoted at $0.50-$0.60 an ounce, little changed from $0.40-$0.60 last week.

In the world’s second biggest gold consumer, India, a dip in domestic prices failed to boost a sluggish market.

“Prices have corrected but consumers are still reluctant to make purchases. They’re waiting for prices to stabilise,” said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.

Indian gold futures were trading around 41,700 rupees per 10 grams on Friday, having jumped to a record high of 44,961 rupees earlier this month.

Dealers in India offered discounts of up to $33 an ounce to official domestic prices, the most since late September, and up from last week’s $25 discount. The domestic price includes a 12.5% import tax and 3% sales tax.

Volatility in global gold prices and the Indian rupee has confused buyers, prompting them to postpone purchases, a Mumbai-based dealer with a bullion importing bank said.

India’s gold imports fell 41% in February from a year earlier as a price rally trimmed retail demand, a government source said on Tuesday.

Reporting by Brijesh Patel and Rajendra Jadhav in Mumbai; additional reporting by K. Sathya Narayanan in Bengaluru; editing by Barbara Lewis

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