Indian Gold Dealers Offer Discounts For First Time In Six Weeks As Buying Slows

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Physical gold in India was sold at a discount for the first time in six weeks as a rebound in local prices to a one-month peak squeezed demand, while purchases slowed in other Asian hubs ahead of the year-end holidays.

India’s local gold futures jumped to ₹ 50,642 per 10 grams on Thursday, the highest level since November 18.

“Demand is very subdued. Retail buyers are postponing purchases because of a price rise,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Dealers were offering a discount of up to $1 an ounce over official domestic prices this week, inclusive of a 10 per cent import tax and 3 per cent sales tax, down from last week’s premium of $2.5.

In China, discounts of $16-$20 an ounce were being offered compared with last week’s range of $19-$24, while gold was being sold at a premium of around $0.50 cents in Hong Kong.

“It’s the year-end and jewellers are trying to finish the inventories and they have adequate, so they are not making any new purchases,” said Dick Poon, general manager at Heraeus Metals Hong Kong Ltd.

China, traditionally the world’s biggest consumer of gold, saw a sharp drop in gold consumption due to the coronavirus pandemic, forcing bullion sellers to offer steep discounts in the past few months.

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