Gold-buying in India remains subdued

mumbai — Physical demand saw an uptick in the world’s biggest gold consumer, China, after prices fell to six-week lows this week, while discounts narrowed in India as buyers postponed purchases, awaiting a bigger fall.

Premiums in China strengthened to $6.5-$8 an ounce from last week’s $4-$6.50, traders said. “Cheaper gold prices led to increased buying in both Hong Kong and China. Shanghai premiums increased on Friday, reflecting higher demand,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

Cheaper gold prices led to increased buying in both Hong Kong and China

Peter Fung, head of dealing at Wing Fung Precious Metals

However, the National Day Golden Week holiday next week is likely to slow activity in China, traders said.

Buying remained subdued in India, the second biggest buyer of the precious metal, as buyers delayed purchases.

In the Indian market, gold futures were trading around 30,255 rupees per 10 grammes on Friday afternoon, after falling to 30,220 rupees earlier in the day, the lowest level since September 5.

Dealers in India were offering a discount of up to $2 an ounce over official domestic prices this week, compared to discounts of $5 last week, the highest in three months. The domestic price includes a 10 per cent import tax.

“Jewellers aggressively bought last month when prices were below 30,000 rupees. They are now waiting for prices to fall below that level,” said a Mumbaibased dealer with a private bank.