India gold discounts widest in nine months

Gold discounts in India were at their widest in nine months this week as higher domestic prices tempered retail purchases, while buying in other Asian centres remained subdued amid a lack of significant momentum in global prices.

Dealers in India were offering a discount of up to $7.50 an ounce over official domestic prices this week, the highest since Sept. 9. This compared with discounts of $5 last week. The domestic price includes a 10 percent import tax.

Gold was being sold at a discount in Indian markets for the sixth straight week.

“Jewellery showrooms were deserted. Retail buying was negligible due to the price rise and Adhik Maas,” said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in Chennai.

Adhik Maas is an extra month in Hindu calendar that ended on June 13. The month is considered inauspicious and people avoid weddings, buying gold or property during the period.

In the Indian market, gold futures were trading at around 31,344 rupees per 10 grams, not far from 31,620 rupees hit in April, their highest since August 2016.

“Jewellers are running operations with thin inventory. They are delaying restocking due to the price rise,” said a Mumbai-based dealer with a private bullion importing bank.

Gold imports into India, the world's second biggest buyer of the metal, could drop by 18 percent in 2018 from a year ago, according to a Reuters poll.

In top consumer China, premiums of $5-$6 an ounce were being charged, compared with $5-$7 last week.

There is not too much activity in China as prices were stuck around the $1,295 to $1,300 level, said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Benchmark spot gold prices continued to move in a narrow range this week, with investors remaining cautious in the run up to a historic US-North Korea summit and the US Federal reserve meeting earlier in the week.