Asia Gold-India festival demand dims as price rally bites
* Indian dealers offer biggest discounts since mid-June
* Moderate buying in other top Asian hubs
* Benchmark spot gold prices set for third weekly gain
* China premiums at $4-$7/oz; 60 cents to $1.20 in Singapore
By Rajendra Jadhav and Vijaykumar Vedala
MUMBAI/BENGALURU, Oct 19 (Reuters) - A key festival broughtlittle activity to the physical gold market in India this weekas purchases remained significantly lower than normal withdomestic prices jumping to the highest in more than two years.
Demand in India, the second biggest gold consumer afterChina, usually strengthens towards the end of the year duringthe traditional wedding season and major festivals includingDiwali and Dusherra, when bullion buying is consideredauspicious.
"Demand was better than last week but if we compare withlast year's Dusherra, it was as much as 40 percent lower in somepockets," Nitin Khandelwal, the chairman of All India Gems &Jewellery Domestic Council, told Reuters.
A rally in local prices due to a depreciating rupee and scant monsoon rains hurt rural purchases, he said.
In the Indian market, gold futures hit the highestsince July 6, 2016, at 32,311 rupees, earlier this week.
Two-thirds of India's gold demand comes from rural areas,where jewellery is a traditional store of wealth. This year,monsoon rainfall was 9 percent below average, denting output ofkey crops and thereby farmers' incomes.
"Jewellers were disappointed with Dusherra demand. If pricesremain at the current level, then Diwali demand will also besubdued," said a Mumbai-based jeweller with a private bullionimporting bank.
Dealers offered discounts of up to $7 an ounce over officialdomestic prices this week, the highest since mid-June, comparedwith the $6 discounts last week. The domestic price includes a10 percent import tax.
Meanwhile, demand was moderate in other major Asian centreswith global benchmark prices on track for a third week ofgains. Premiums in China eased to $4-$7 per ounce versus $4.50-$8last week.
"Physical demand has been steady this week in China and HongKong. Demand, especially for jewellery, should increase over thecoming months ahead of the festive season," said Peter Fung,head of dealing at Wing Fung Precious Metals in Hong Kong.
Premiums in Hong Kong were around 70 cents-$1.50 against$1-$1.50 previously.
"Dealers across Asia report increased volumes in sales ofscrap gold, as sellers are taking advantage of the appreciationin gold price," said Joshua Rotbart, managing partner at J.Rotbart & Co in Hong Kong.
In Singapore, dealers charged premiums of 60 cents to $1.20over the benchmark, against 80 cents-$1.20 previously.
"We saw some buying on dips in gold prices, especially fromjewellers ahead of the Indian festival Diwali," said Brian Lan,managing director at Singapore dealer GoldSilver Central.
In Japan, prices remained on par with the benchmark, aTokyo-based trader said.
(Reporting by Rajendra Jadhav in Mumbai and Vijaykumar Vedalaand Eileen Soreng in Bengaluru; editing by Arpan Varghese andDavid Evans)
(If within U.S. call 651-848-5832); Reuters Messaging:vijaykumar.vedala.thomsonreuters.com@reuters.net)) Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |