Discounts on gold jewellery for first time in 7 weeks

Last Updated: Sun, Feb 19, 2017 16:48 hrs
FILE PHOTO - A salesman shows gold bangles to a customer at a jewellery showroom during Dhanteras in Kolkata

Gold is beind sold at a discount to official prices in India on Friday for the first time in seven weeks, and buyers elsewhere in Asia are also holding back purchases, waiting for rallying bullion prices to ease.

Dealers in India, the world's second-largest gold consumer, were offering a discount of up to Rs 70 per gram this week from official domestic prices. The domestic price includes a 10% import tax.

"The market is losing momentum due to the price rise. Prices need to come down below Rs 28500 rupees (per 10 grams) to boost demand," said a Mumbai-based dealer with a private bank.

Gold was trading around Rs 29400 per 10 grams on Friday, after falling to Rs 26862 rupees in December, the lowest level since February 2, 2016.

Gold demand in India will be muted this year after dropping to multi-year lows in 2016, as the government pushes to make the market more transparent and brings in a new tax, the World Gold Council (WGC) has said.

"Demand has been falling after remaining robust for the past two-three weeks," said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler based in Chennai in southern India.

"Retail buyers are waiting for (a) price correction. Even jewellers have stopped re-stocking," he said.

India's gold imports in January fell 30 percent from a year ago to $2.04 billion.

Premiums in China, the top consumer, were quoted $10 over international spot prices.

Hong Kong and Singapore premiums dropped slightly to 70 cents to $1.10 from last week's 80 cents-$1.20.

Prices in Japan were at a discount of 50 cents to $1, said a Tokyo-based trader. 

All this after gold crept higher on Friday as investors opted for its relative safety given uncertainty about US and European politics and the direction of stock markets.

Gold, on track for a third week of gains, has risen about 7.5 percent in 2017.

"The physical side has been very weak still, as people are hesitant in buying at these levels,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"We are seeing only those who are buying for investment purposes since Donald Trump came in January. (The) rest of them aren't buying and (are) waiting for prices to come down."

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