Gold price drop boosts India buying, lifts premiums to eight-month high
On Friday, local gold futures fell to 45,861 rupees per 10 grams, the lowest level since June 2020
Last Updated at February 20, 2021 08:45 IST
By Rajendra Jadhav and Bharat Gautam
(Reuters) – Physical gold demand in India this week surged as local prices dropped to their lowest levels since June last year, with buying expected to pick up in other Asian centres after the Chinese Lunar New Year holiday week.
In India, dealers were charging a premium of up to $7 an ounce over official domestic prices, the highest in eight months. Last week they were charging a premium of up to $5 inclusive of 12.5% import and 3% sales levies.
“Sales are robust. People are buying coins, bars and jewellery because of price correction,” said Chanda Venkatesh, managing director of CapsGold, a bullion merchant based in the southern city of Hyderabad.
On Friday, local gold futures fell to 45,861 rupees per 10 grams, the lowest level since June 2020.
Supplies are limited but demand is robust from jewellers, who are keen to build inventory for the festival and wedding season, said a Mumbai-based dealer with a bullion importing bank.
Gold demand in China, the world’s biggest bullion consumer, is expected to rise after the Chinese New Year celebrations. Customers were charged premiums of $5-$8 an ounce over benchmark spot rates, unchanged from last week’s prices.
In Singapore, premiums were charged in the range of $1-$2 an ounce on gold, dealers said.
In Hong Kong, gold was sold between a discount of $4 and a premium of $1.5 as the market remained quiet, dealers said.
Japanese dealers said they charged premiums between $0.50 and $1, unchanged from last week, as physical gold demand remained strong on lower local prices.
Demand for physical silver also outstripped production, dealers in multiple hubs said.
“Demand for silver is tight because refiners cannot shift production overnight,” said Joshua Rotbart at dealers J. Rotbart & Co, adding that premiums on silver products are going up exponentially.
(Reporting by Asha Sistla and Bharat Govind Gautam in Bengaluru, Rajendra Jadhav in Mumbai; additional reporting by Swati Verma; Editing by Ramakrishnan M.)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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