Demand for physical gold accelerated this week as some consumers bought in to lower domestic prices to near-month lows ahead of the Dhanteras and Diwali festivals.
“Retail consumers find the prices attractive; they dropped just before (the) festival which is good for jewelry sales,” said Harshad Ajmera, owner of JJ Gold House, a wholesaler in Kolkata.
On Friday, local gold prices fell to 49,810 rupees per 10 grams, the lowest since September 29.
Apart from jewellery, sales of bullion coins and bullion have also been robust, said a Mumbai-based bullion dealer with a private bank.
Higher purchases allowed dealers to raise premiums up to $2.5 an ounce over official domestic prices, including 15% levies on imports and 3% on sales, up from $1.5 $ last week.
Banks have diverted supplies to markets where premiums are higher, such as China and Turkey.
In top consumer China, premiums rose further to $27-40 an ounce against world spot prices, from $27-32 last week.
It appears that the tightness in the Shanghai market is as much the result of supply difficulties as good local demand, said independent analyst Ross Norman.
China’s central bank controls the amount of gold entering the country via quotas at commercial banks and lately there has been no sign of new quotas as the PBOC tries to stem the approaching outflow of the yuan. lows reached during the 2008 financial crisis.
Bernard Sin, regional director, Greater China at MKS PAMP, reiterated that new quotas could be issued after the ongoing Communist Party Congress.
In Hong Kong gold sold at premiums of $1-$3 and in Singapore at $1.50-$2.50 above the benchmark.
Jewelry demand could see notable gains in 2023 as consumer spending improves and prices weaken, while physical investment is expected to remain historically high, Metal Focus said in a note.
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