Mumbai, Feb. 17 (BNA): Physical gold buyers in some Asian centers were drawn in by lower domestic prices this week, while central bank demand kept premiums in China in check.
Domestic gold prices in India registered a decline of 56,496 rupees per 10 grams from an all-time high of 58,826 rupees last week, Reuters reports.
Ashok Jain, owner of Mumbai-based gold wholesaler Chinnaji Narsingji, said demand from jewelers and retail consumers has improved due to price correction.
Dealers offered discounts of up to $18 an ounce off official domestic rates including 15% import and 3% sales tax, less than last week’s $48 discount.
“After two months there is some momentum in the market. A lot of buyers who put off their purchases in hopes of lower import duties will start buying if prices fall further,” said a trader in Mumbai who works for a private bank.
India did not cut import duties on gold in its annual budget submitted on February 1, despite demands from the bullion industry, but instead raised duties on silver.
Dealers in China, the biggest consumer, raised premiums to between $12 and $15 an ounce compared to the global spot benchmark, from $10 to $15 last week.
“Retail demand is starting to slow. However, China will continue to add gold to the basket of reserves, possibly to defend the renminbi,” said Bernard Sen, Regional Director for Greater China at MKS PAMP.
The value of China’s gold reserves rose to $125.28 billion at the end of January, from $117.24 billion at the end of December.
Central banks added a record 1,136 tons of gold to stockpiles in 2022.
In Hong Kong, bullion was sold at par with premiums of $2, while dealers in Singapore charged premiums of $1 to $2.
Peter Fung, head of dealing at Wing Fung Precious Metals, said that since gold prices fell, we could see buying interest, but concerns about rising interest rates curbed appetite.