India’s festival week fails to spark gold demand
November 03 2018 12:49 AM
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A salesman shows gold bangles to customers at a jewellery showroom in Kochi. Physical gold demand in India was lacklustre this week, with dealers offering discounts for the metal ahead of a traditionally busy festival week for the first time in at least three years, as high prices kept consumers away.

Reuters/Bengaluru/Mumbai

Physical gold demand in India was lacklustre this week, with dealers offering discounts for the metal ahead of a traditionally busy festival week for the first time in at least three years, as high prices kept consumers away.
Prices in India, the second biggest gold consumer after China, held near Rs33,000 per 10 grams, the highest since September 2013, ahead of the Dhanteras and Diwali festivals next week, when buying gold is considered auspicious.
“Diwali is just a week away but there is no improvement in demand. Retail buyers are not interested in making purchases at the current price level,” said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.
The Indian currency has lost more than 12% of its value against the US dollar so far in 2018, making purchases of commodities denominated in the greenback more expensive.
Dealers in India were offering a discount of up to $7 an ounce over official domestic prices this week, unchanged from last week and the highest since mid-June.
The domestic price includes a 10% import tax.
“Every year gold trades at a premium before Diwali. This year is unusual. Jewellers are reporting a steep fall in retail demand,” said a Mumbai-based bullion dealer with a private bank.
Indian gold demand in 2018 is expected to fall from the previous year as a rally in local prices to five-year highs is likely to dent purchases during key festivals in the December quarter, the World Gold Council said on Thursday.
Global benchmark spot gold has gained about 6% since declining to $1,159.96 an ounce in mid-August, the lowest since January 2017.
In top consumer China, premiums were slightly higher at $4-$7 per ounce versus $4-$6 last week, while premiums in Hong Kong were seen at 70 cents-$1.50 as against 70 cents-$1.20 earlier.
“Demand has been steady. We should see some good demand heading into Christmas and the Chinese New Year,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Meanwhile, Singapore is expected to see an uptick in purchases owing to Diwali demand from the Indian community.
“Locally in Singapore, we see some pickup in physical demand because they (jewellers) want to increase the variety of jewellery to offer during Diwali,” aid Brian Lan, managing director at Singapore dealer GoldSilver Central.
Dealers charged premiums of 60 cents to $1 an ounce against 70 cents-$1.50 last week in Singapore.
In Japan, premiums remained at par with the benchmark for a seventh straight week, a Tokyo-based trader said, adding higher prices of bullion deterred buyers.






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