Boost in Gold Demand During India's Dhanteras Amidst Price Hike
Gold demand in India saw a positive uptick this week, driven by the auspicious Dhanteras festival. However, initial reports indicate that purchases in the major hub were slightly lower compared to the previous year, mainly due to the deterrent effect of higher gold prices.
Karobar
India celebrated Dhanteras on Friday, marking the first day of the Diwali festival, a traditionally favorable time for purchasing gold. Despite the festivities, some customers were discouraged by elevated prices, resulting in a moderate increase in demand.
Dealers were able to adjust discounts to approximately $4 per ounce over official domestic prices, including 15% import and 3% sales levies. This marks a reduction from the previous week's $9 discounts.
Prithviraj Kothari, President of the India Bullion and Jewellers Association Ltd (IBJA), noted, “Demand, particularly for coins and bars, has shown improvement. Many customers had pre-booked gold during a period of lower prices, and they’re simply receiving deliveries today.”
Local gold prices stood at around 60,000 rupees ($720.66) per 10 grams on Friday, slightly down from the peak of 61,539 rupees ($739.15) observed last week.
Although the timely price correction is attracting buyers, demand is tempered by the fact that prices have surged nearly 20% from a year ago, according to a Mumbai-based bullion dealer with a private bank. The dealer suggested that another drop of 500 to 1,000 rupees could potentially stimulate demand even further.
Meanwhile, in China, the top bullion buyer, dealers charged premiums of $40-$50.1 per ounce over global spot prices, up from last week’s $25-$40. The People’s Bank of China (PBOC) has yet to issue new import licenses, contributing to the increase in premiums.
Hugo Pascal, a precious metals trader at InProved, commented, “The PBOC hasn’t issued new import licenses yet, hence the pickup in premiums. But I don’t see premiums roaring back to pre-Golden week levels.”
As of the end of October, China held 71.20 million fine troy ounces of gold, up from 70.46 million at the end of September.
In Japan, gold transactions ranged from $0.5 discounts to $1 premiums, while in Hong Kong, bullion was sold at $1.5-$2.5 per ounce premiums, and in Singapore, at $1.25-$2.25.
