Indian gold demand remains sluggish as prices soar

Gold buying stagnated in India as local rates soared, though some investors used temporary price dips to buy, hoping to cash in on a further leg up

Post By : IJ News Service On 30 July 2019 4:47 PM

High prices prompted some Asian consumers to sell back physical gold this week in a hunt for profits, with cheaper silver emerging as a preferred investment. Gold buying stagnated in India as local rates soared, though some investors used temporary price dips to buy, hoping to cash in on a further leg up.

In India, demand remained sluggish as prices held at record highs, prompting dealers to offer discounts for the eighth straight week. "Jewellers are not making fresh purchases due to higher prices. They are getting scrap supplies at a discount, which they can use for jewellery making," said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in Kolkata. Dealers offered discounts of up to $24 an ounce over official domestic prices, compared with $33 last week, which was the highest since August 2016. The domestic price includes a 12.5% import tax and 3% GST duty.

"Legal imports have plunged due to the duty hike. In July imports would be less than 40 tonnes," said a Mumbai-based dealer with a private bullion importing bank. India raised import duties on gold and other precious metals to 12.5% from 10% earlier this month. Global benchmark spot gold held above $1,400 an ounce this week, up more than 10% this year and on course to end July with a third consecutive monthly gain.

"With prices already at high levels, consumers have decided to re-sell," said Brian Lan, managing director at Singapore dealer GoldSilver Central, though he added: "Every time there is a price correction, we might see some investors and wholesalers buying. We're seeing more buying in silver rather than gold. People are looking for undervalued assets and it seems like they have decided that silver is that asset."

Be the first to comment

Leave a comment

Email Alerts

WhatsApp Alerts