Dealers in India, the world’s second largest consumer of the gold, were offering a discount of up to $3 an ounce over official domestic prices this week Mumbai/Bengaluru: Gold prices in India swung to a discount this week as a rally in prices dampened retail demand and prompted jewellers to reduce purchases, while demand in leading consumer China went up on safe-haven buying on worries over the US presidential election.Gold prices were up nearly 2% this week. Ever since the FBI announced an investigation into Democratic candidate Hillary Clinton’s emails, uncertainty over the outcome of the election has peaked, with markets not ruling out the possibility of a victory for Republican Donald Trump.
Dealers in India, the world’s second largest consumer of the metal, were offering a discount of up to $3 an ounce over official domestic prices this week. Last week they were charging a premium of $3, the highest in 2016, on robust demand due to festivals like Diwali and Dhanteraas. Demand for gold usually strengthens in the final quarter as India gears up for the wedding season as well as festivals such as Diwali and Dhanteraas, when buying the precious metal is considered auspicious.“After Dhanteraas retail demand has significantly reduced due to the price rise. Consumers are reluctant to buy above Rs30,000,” said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation.
Gold prices in India were trading above Rs30,400 per 10 grams. They hit a high of Rs30,686 on Wednesday, their best since 4 October.“Consumers are postponing purchases. They are anticipating a correction in prices,” Bamalwa said.India’s overseas purchases of gold likely hit a nine-month high in October, as a flip in domestic prices to a premium prompted banks and refiners to resume imports ahead of the festival season.Meanwhile, China saw good demand due to safe-haven buying, pushing premiums up to $4 from $2 against the international benchmark last week.Buying re-emerged this week due to the US election, said Samson Li, an analyst with Thomson Reuters-owned metals consultancy GFMS.“We are seeing good buying because of the uncertainty ahead of the US elections as people feel that gold is definitely going to go up,” said Brian Lan, managing director at Singapore-based gold dealer GoldSilver CentralIn Hong Kong, sellers were offering a premium of 60 to 80 cents an ounce, while in Singapore premiums were up at 80 cents compared with 50 cents the previous week.Demand in Japanese markets continued to remain tepid with premiums flat for the third straight week. Most investors were awaiting the US election results, dealers said.
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