Gold: Indian’s Buy Dips; Lunar New Year Boosts Demand in China; Investors Hedge Risk

Gold: Indian’s Buy Dips; Lunar New Year Boosts Demand in China; Investors Hedge Risk


  • Indian discounts shrink; dealers eye import duty announcement
  • China premiums at $9.50-$11.50 oz
  • Festival buying picks up in Singapore

Demand for physical gold in India improved last week as local prices eased from their highest level in over 5 years, while buying gathered steam in China ahead of the Lunar New Year festival.

Dealers in India were offering a discount of up to $5 oz over official domestic prices, down from the prior week’s discount of $7. The domestic price includes a 10% import tax.

Demand has been slowly improving from retail buyers but still, higher prices are deterring many consumers.

Gold dealers are now awaiting a budget presentation by Prime Minister Narendra Modi’s government on 1 February.

“Some jewelers are postponing purchases expecting a duty cut in the next week’s budget,” said a Mumbai-based dealer with a global trading firm.

The bullion industry has been urging a tax reduction to combat smuggling, which has increased since India raised the import duty to 10% in August 2013 to narrow its current account deficit.

India’s gold imports in December fell 24.3% from a year ago to $2.57-B, trade ministry data showed.

Also seeing strong buying was Top consumer China, with premiums ranging from $9.50 to $11.50 oz last weekm Vs the prior week’s $6-$9 range.

Prices in Hong Kong were between flat and about a $1.20 premium over the benchmark.

International benchmark spot gold prices traded in a tight range, between $1,276.31 and $1,286.54 oz, but were on course for a small weekly gainer, buoyed by concerns surrounding global growth and a prolonged US government shutdown, that saw investors buy gold as a safe haven.

“January is a typically strong month as seasonal demand picks up,” said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS, adding the market is busy anticipating the Lunar New Year.

Demand tends to gather pace going into the Lunar New Year, which falls during the 1st week of February, since gold is considered a popular gift during this time.

The festive season also helped lift buying in Singapore, where premiums charged ranged from 60 to 70c Vs 80c to $1.50 in the prior week.

“There is some demand, but generally, most buyers are looking to get it lower before good demand kicks in,” said a trader based in Singapore.

Japanese gold demand was stable last week, finding support from uncertainties in trade talks between the US and China, a Tokyo-based trader said, adding prices were on par with the benchmark.

Have a terrific weekend.

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