India gold discounts widen; Bangladesh launches trade policy

Higher domestic prices dented demand for physical gold in India, prompting dealers to offer the biggest discounts in 3-1/2 months this week, while neighbouring Bangladesh approved its first policy to regulate imports and exports of the metal.

Some customers in Singapore and elsewhere in Asia cashed in on a slight dip in global prices earlier this week, even as markets in top consumer China were closed for the Golden Week festival.

In India, the second biggest gold consumer after China, dealers offered discounts of up to $6.5 an ounce over official domestic prices, the highest since mid-June, compared with $2 discounts last week. The domestic price includes a 10 percent import tax.

"Retail demand is weak due to the price rise. Buyers are waiting for correction," said Harshad Ajmera, a gold wholesaler based in the eastern city of Kolkata.

Earlier this week, gold futures in India hit their highest since June 15, at 31,350 rupees, while the rupee hit a record low of 74.1 to the dollar on Friday.

"Jewellers are not active due to a falling rupee. International markets are also very volatile," said a Mumbai-based dealer with a global trading firm.

India's gold imports were expected to rise in the fourth quarter.

Demand usually strengthens at the end of the year, driven by the wedding season and major festivals, when bullion buying is considered auspicious.

Bangladesh approved its first gold policy this week, which will facilitate the import and export of the metal, Cabinet Secretary Shafiul Alam said.

Bangladesh's central bank will appoint dealers for importing gold bars, which were previously smuggled in because of the absence of an import policy, he said.

In Singapore, premiums of 80 cents to $1.30 an ounce were charged over global benchmark rates, versus $1-$1.50 last week.

"Somewhat surprisingly, the upward move in the U.S. dollar gold prices this week triggered some of our larger customers in Singapore to make purchases," said Ronan Manly, precious metals analyst at Singapore-based dealer BullionStar.

"This may signal a confidence by those customers that this week's price recovery has legs and offers a good entry point at current levels."

Benchmark spot gold traded between $1,184.21 and $1,208.32 per ounce this week.

"If the price goes down by another $20, we will see demand emerging," a banker in Singapore said.

Premiums in Hong Kong were mostly unchanged at 70 cents-$1.30.

"Demand should recover after October as we move into the festive season," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

In Japan, prices remained on par with the benchmark, a Tokyo-based trader said.

($1 = 73.82 Indian rupees)

Source: https://www.business-standard.com

Tags :

Share this news on:

Previous Story

Trending Topics

Archive