Home Business Ahead of Diwali, low domestic prices boost gold buying in Asia

Ahead of Diwali, low domestic prices boost gold buying in Asia

On Friday, gold fell to Rs 49,810 per 10 grams at the local level, which is the lowest level since September 29.

Demand for physical gold picked up this week as some consumers bought at near one-month lows ahead of Dhanteras and Diwali festivals with domestic prices falling.

Harshad Ajmera, owner of JJ Gold House, a Kolkata-based wholesaler, said, “Retail consumers are finding the prices attractive; they drop just before the festival, which is good for selling jewellery.”

On Friday, gold fell to Rs 49,810 per 10 grams at the local level, which is the lowest level since September 29.

A Mumbai-based bullion dealer of a private bank said sales of coins and bars for jewelery as well as investments were strong.

The higher buying allowed dealers to increase the premium to $2.5 an ounce on official domestic prices, which includes a 15 percent import and 3 percent sales duty, up from last week’s $1.5.

Banks are diverting supply to markets with high premiums such as China and Turkey.

In top consumer China, the premium against global spot prices rose to $27-$40 an ounce, from $27-$32 the previous week.

Independent analyst Ross Norman said the tightness in the Shanghai market appears to be a result of consequent supply difficulties, as much as it is good local demand.

China’s central bank controls how much gold enters the country through quotas given to commercial banks and until recently, there has been no sign of new quotas as the PBOC tries to block the yuan’s outflow, which was the highest since 2008. The short hit was approaching during the financial crisis.

Bernard Sin, regional director for Greater China at MKS PAMP, reiterated that new quotas could be issued after the current Communist Party Congress.

In Hong Kong, gold was sold at a premium of $1-$3 above the benchmark and in Singapore at $1.50-$2.50.

Metal Focus said in a note that 2023 could see a significant increase in demand for jewelery as consumer spending improves and prices weaken, while physical investments should remain historically high.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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