By Rajendra Jadhav and Bharat Gautam
(Reuters) – Gold discounts widened in India this week as demand faltered due to a rise in prices and a winding up of wedding season, while consumers remained wary of purchasing bullion in top consumer China amid a gradual relaxing of coronavirus restrictions.
Indian dealers offered a discount of up to $9 an ounce over official domestic prices this week — inclusive of the 10.75% import and 3% sales levies, up from the last week’s $5 discount.
Local gold prices were trading near their highest level in a month on Friday.
Retail demand has been falling for the past few days because of rising prices, said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
“Wedding season is coming to an end. In June demand will remain muted,” he added.
Demand from rural areas will fall further in coming weeks as monsoon rainfall has started and farmers will focus on sowing of summer-sown crops, said a Mumbai-based bullion dealer with a gold importing bank.
In China, gold was being sold at a discount of $0.5 to $1.5 an ounce premium versus global benchmark spot rates.
“The trading is still very slow,” said Peter Fung, head of dealing at Wing Fung Precious Metals.
COVID-19 lockdowns were further eased this week in the business hub of Shanghai, though citizens are required to show negative results to enter public spaces.
“Retailers have become very cautious about stock replenishment due to fears about potential new virus outbreaks,” Metals Focus said in a note this week.
“If virus outbreaks ease gradually over the rest of this year, we forecast a 14% drop in Chinese gold jewellery fabrication for 2022.”
In Hong Kong, gold was sold at a discount of about $1.8 an ounce to a $1 premium, while Singapore saw premiums at $1.20-$1.60 an ounce.
In Japan, gold was sold on par with the benchmark, a trader said.
(Reporting by Eileen Soreng, Bharat Govind Gautam in Bengaluru, Rajendra Jhadav in Mumbai; Editing by Christina Fincher)
