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Price drop lures buyers in Asia

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Reuters 19 Jun 2021

BENGALURU: Gold purchases in India ticked up in the later part of the week after a decline in local rates, although dealers cautioned that demand is unlikely to return to normal levels soon.

The fall in bullion prices also stirred buying in top consumer China, pushing down discounts to around $5 per ounce versus global benchmark spot rates, from $12-$16 earlier this week, dealers said.

Jewellers and bullion dealers in India were making small purchases on Thursday after prices corrected sharply, said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in Kolkata.

“Retail demand is slowly improving but unlikely to go back to normal level anytime soon,” he said.

Local gold futures fell to 46,744 rupees on Thursday, a trough since May 5. Discounts were unchanged at about $12 an ounce, the highest since mid-September 2020, on official domestic prices – inclusive of 10.75% import and 3% sales levies.

Jewellery stores have opened in most parts of the country but they are witnessing lower footfalls, said a Mumbai-based bullion dealer with a gold importing bank.

“The industry is sceptical on how quickly demand would recover to normal level. Many believe it may not before festivals in August,” the dealer said.

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