India gold demand firms ahead of festival; China premiums ease

Gold demand in India picked up slightly this week ahead of a key festival, although elevated prices weighed on sentiment, while premiums in China narrowed as retail demand slowed.

Akshaya Tritiya, the second-biggest gold-buying festival in India after Dhanteras when buying gold is considered auspicious, will be celebrated on April 19.

“Retail buyers have started making bookings for the Akshaya Tritiya festival, but footfalls are far lower than normal. They are struggling to adjust to higher prices,” said an Ahmedabad, Gujarat state-based jeweller.

Domestic gold prices in India were trading around 152,800 rupees ($1,651.98) per 10 grams on Friday after rising to a three-week high of 154,934 rupees earlier this week.

Dealers quoted discounts of up to $6 an ounce and premiums of $9 an ounce over official domestic prices this week, inclusive of 6% import and 3% sales levies, compared with last week’s discounts of up to $8 an ounce and premiums of $2.

“Ahead of Akshaya Tritiya, jewellers usually make healthy purchases, but this year their buying is negligible. The atmosphere doesn’t suggest the festival is approaching,” said a Mumbai-based bullion dealer with a private bank.

In top consumer China, bullion traded at premiums of $3 to $5 an ounce over the global benchmark price this week, lower than last week’s premiums of $12-$17.

Chinese premiums narrowed sharply due to softer retail demand and expectations of quota loosening, said Bernard Sin, regional director of Greater China at MKS PAMP.

Meanwhile, China’s central bank stayed the course on gold purchases for a 17th consecutive month.

“Despite global price weakness, the central bank’s buying supported sentiment … Jewellery demand remains weak, down about 25% year-on-year, while investment demand is still resilient but more selective,” Sin said.

International spot gold prices were on track for a third consecutive weekly gain on optimism surrounding the US-Iran ceasefire.

In Hong Kong, physical gold traded at par to premiums of $3, while in Japan, gold was sold at a premium of $1.

In Singapore, gold was sold at premiums of $1 to $3, versus premiums of $0.25 to $1.80 last week.

($1 = 92.4950 Indian rupees)

(By Noel John and Rajendra Jadhav; Editing by Subhranshu Sahu)