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Gold Demand Picks Up in India After Price Drop; China Premiums Ease
India gold discounts narrowed to $35/oz from $87 after prices hit six-week lows. China premiums fell to $1-$5, signaling softer demand despite PBOC buying.
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Gold demand in India ticked up this week. Gold prices slipped to their lowest since early April, drawing jewellery buyers back into the market. Premiums in China narrowed sharply.
Indian gold futures fell to 146,444 rupees per 10 grams on Thursday, down 1.5% for the week. Dealers quoted discounts of up to $35 an ounce over official domestic prices, inclusive of 15% import and 3% sales levies. That was a sharp narrowing from last week's discounts of up to $87.
The price correction brought buyers back, particularly for jewellery, said Chanda Venkatesh, managing director at CapsGold, a bullion merchant in Hyderabad. Restocking has been measured. A Mumbai-based bullion dealer at a private bank said confidence in retail demand for the coming months is still weak.
India raised import tariffs on gold and silver to 15% from 6% last month, part of efforts to ease pressure on foreign exchange reserves from higher oil prices. The duty hike had pushed domestic prices higher in May, triggering profit-taking in gold ETFs. India's physically backed gold ETFs logged their first net monthly outflow in a year in May. Investors booked profits after the sharp rise in prices triggered by higher import duties.