Yahoo Finance High gold prices dull activity in India and China
By Rajendra Jadhav and Sherin Elizabeth Varghese
(Reuters) - Physical gold dealers in India offered discounts for the ninth consecutive week due to high prices, as they await a potential import duty reduction in the upcoming budget, while top consumer China also saw weakness in demand.
Gold demand in India, the world's second-largest gold consumer and a major importer, has slowed as rising prices deterred buyers who are awaiting a potential import duty cut in the upcoming budget.
Domestic prices were trading around 72,600 rupees per 10 grams on Friday, after hitting a record high of 74,442 rupees in May.
"Every year before the budget, jewellers speculate about possible duty cuts and avoid making purchases. This year is no exception,” said a Kolkata-based dealer.
Prime Minister Narendra Modi's government is likely to present India's budget in July.
Indian dealers offered a discount of up to $11 an ounce over official domestic prices – inclusive of 15% import and 3% sales levies, versus last week's discount of $9.
"Elevated prices have dampened retail demand across the country. In rural areas, farmers are busy with crop sowing activities as rainfall has picked up," said a Mumbai-based dealer with a private bullion importing bank.
India's annual monsoon rains covered the entire country on Tuesday, six days ahead of the usual time of arrival.
In China, dealers charged premiums of $11-$24 per ounce over international spot prices this week, compared with $12-$23 last week.
"Gold activity in China continues to highlight weakness in retail and wholesale demand, judging by latest data, as high prices weigh on it," Hugo Pascal, precious metals trader at InProved, said.
Meanwhile, gold was sold at par to $3 premiums in Singapore and at par to $2 premiums in Hong Kong.
"We are seeing greater customer interest in sales and inquiries in silver bars and coins, partly due to higher gold prices," said Vincent Tie, sales manager at Singapore dealer Silver Bullion.
In Japan, bullion was sold at par to $0.50 premiums.
(Reporting by Sherin Elizabeth Varghese and Ashitha Shivaprasad in Bengaluru and Rajendra Jadhav in Mumbai; Editing by Shreya Biswas)
