Gold prices fail to enthuse buyers

Bengaluru/Mumbai, Oct. 27: The physical gold market remained quiet in most Asian centres this week despite a drop in prices with India witnessing a lull in fresh purchases as key festival season demand cooled off in the world’s second biggest consumer.

Gold prices in India slipped to `29,209 per 10 grams on Friday, the lowest level in about two months.

Prices in India were at a premium of up to $3 an ounce over official domestic prices this week, up from $2 last week. The slight increase in premiums was due to traders looking to cover for purchases made when rates were higher.

“After Diwali, demand falters every year. This year, even during Diwali demand was lower than usual,” said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in Chennai.

Last week, Indians celebrated the Diwali and Dhanteras festivals, when buying bullion is considered auspicious.

“Jewellers have to replenish inventory after Diwali sales. Since prices are falling, they will do it very slowly,” said a Mumbai-based dealer with a private bank.

“In the last few days the government was selling gold bonds. Some investors are giving preference to bonds over physical gold due to tax benefits.”

Meanwhile, benchmark spot gold prices were headed for an about 1 percent weekly decline, having hit a near threemonth low of $1,264.15 on Friday.

The drop in rates, however, failed to reignite interest for gold in most Asian hubs. “In Singapore, several businesses in the region referred to as ‘Little India’ have said that the festival sales were not great and that it had come down when compared to the Diwali season in the last two years,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.