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18
January 2019
 |
Gold
(The Total Investment & Insurance Solutions)
Gold demand turned fragile this week in India
as local prices jumped to their highest level in 2-1/2-years, while traders in
major buying centres in Asia pinned hopes on purchases ahead of the approaching
Lunar New Year.
A salesman shows gold necklaces to a customer
at a jewellery showroom during Dhanteras, a Hindu festival associated with
Lakshmi, the goddess of wealth, in Kolkata, India November 5, 2018.
REUTERS/Rupak De Chowdhuri/File Photo
Local gold prices in India, world’s
second-largest gold consumer, touched their highest since July 2016 this week.
“Prices are just moving higher and higher.
Buyers are waiting for a correction in prices and the annual budget as there is
speculation of a duty cut,” said a Mumbai-based dealer with a bullion importing
bank.
Prime Minister Narendra Modi’s government
will present the budget on Feb. 1.
The bullion industry has been urging a tax
reduction to combat smuggling, which has increased since India raised the
import duty to 10 percent in August 2013, to narrow its current account
deficit.
The industry speculates about the duty cut
every year before the budget but the government hasn’t made any change in the
tax structure in last six years, the dealer quoted earlier said.
Dealers in India were offering a discount of
up to $7 an ounce over official domestic prices this week, up from last week’s
discount of $6. The domestic price includes a 10 percent import tax.
“Supplies are limited in the market due to
lower imports in last few weeks,” said Ashok Jain, proprietor of Mumbai-based
gold wholesaler Chenaji Narsinghji.
India’s gold imports in December fell 24.3
percent from a year ago to $2.57 billion, trade ministry data showed earlier
this week.
Premiums in top consumer China stood mostly
unchanged from last week at $6 to $9 an ounce.
Buying has been drying up a bit, said Samson
Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.
“Firstly, some restocking (by jewellers for
Lunar New Year) has already been done, and secondly, the appreciation of the
yuan has kept the Chinese gold price stable without much volatility.”
Traders expected demand to pick up ahead of
the Lunar New Year, which falls during the first week of February, since gold
is considered a popular gift during this period.
In Singapore, premiums firmed slightly to 80
cents to $1.50 from last week’s 60 cents-$1.50 range, while Hong Kong premiums
were unchanged from last week at 60 cents-$1.30.The Total Investment & Insurance Solutions
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