Gold dealers in India continued to stock up this week ahead of an expected festival sales bump even as the Golden Week in top consumer China did little to revive bullion demand. Dealers charged an $1 an ounce premium over official domestic prices, inclusive of 12.5% import and 3% sales taxes, down from last week’s premium of $2, according to a report.
Mukesh Kothari, director at Mumbai gold dealer RiddiSiddhi Bullions, said demand from dealers has been improving slowly as they expect a revival in retail purchases during the festival season, according to Reuters. Gold is considered an intrinsic part of festivals such as Dussehra in late October, and Diwali and Dhanteras in November.
Reuters cited a Mumbai-based dealer with a bullion importing bank as saying that limited supply due to September’s sharp drop in imports also allowed dealers to charge a premium.
Discounts in China eased to $30-$35 an ounce, their lowest since July, versus global benchmark spot gold rates as a week-long holiday saw some retail buying, although demand was still subdued. “They have sufficient gold to circulate and that’s why there is no rush for the time being,” Bernard Sin, regional director for Greater China at MKS, was quoted as saying by Reuters. Sin added that demand could pick-up in the run-up to the Chinese new year.
Activity in Hong Kong was also muted, with gold sold between a $0.50 discount to a $1 premium over global rates.
Keanan Brackenridge, product manager at LPM Group Ltd, said increased costs from mints and refineries to get gold into Hong Kong have caused premiums to persist.
