India offers gold discounts as price fall propels buying elsewhere

Gold was sold at a discount in India as demand remained subdued for a fourth straight week while buying in the rest of Asia picked up as prices fell for a third consecutive week.

“Many consumers are busy in paying advance tax. Since this is last month of the financial year, they have to pay taxes by March end,” said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.

India’s financial year runs from April to March.

Dealers in India were offering a discount of up to $3 an ounce over official domestic prices, compared with a premium of $2 last week. The domestic price includes a 10 per cent import tax.

“Retail demand is very weak. Despite the correction in prices, consumers are showing little interest in buying,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.

In the local market, gold was trading at ~30,405 per 10 grams, after hitting a 15month high of ~30,839 last month.

India’s gold imports in February dropped a quarter from a year ago to 63 tonnes as higher prices curtailed demand in the world’s second-biggest consumer of bullion, provisional data from precious metals consultancy GFMS and bank dealers showed.

Weddings and Akshay Tritiya festival, when buying gold is considered auspicious, could lift demand in April, Ajmera said.

Meanwhile in China, there was some good buying through the mid week, with gold selling at a premium of $6-$8 over benchmark rates this week, down slightly from $8-10 last week.

Gold prices extended losses into a third session on Friday as the dollar strengthened against the yen on hopes of easing tensions between the United States and North Korea and ahead of US nonfarm payroll data later in the day.

Benchmark spot gold prices have fallen for a third straight week.

Premiums of 70 cents to a $1.20 were being charged in Hong Kong last week, while in Singapore, premiums were unchanged at the 80 cent level.