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India extends discount while China sees safe haven buying

Physical gold dealers are offering bigger discounts in India this week to attract buyers at the end of the wedding season. Some Chinese consumers are buying gold bullion to counter growing economic concerns.

Weddings are one of the biggest gold buying drivers in India.

“Footfalls at jewelry stores are far lower than the last month. Retail buying is tepid since wedding season is over,” said Mukesh Kothari, director at RiddiSiddhi Bullions in Mumbai.

The discount of around $8 per ounce is derived from the official domestic price. This includes 10.75% imports and 3% sales tax, compared to last week’s discount of $6.

Buying by jewelers and dealers is also weak as retail demand may remain weak in the coming weeks.

In China, gold changes hands between the global spot price of $2 and $3 per ounce premium.

Although trading volumes in Shanghai are relatively quiet, people still prefer to buy gold as a safe investment, especially in times of inflation and geopolitical problems.

It’s been nearly a month since the Shanghai city center lifted its lockdown. But China continues to struggle with sporadic COVID-19 outbreaks, and consumers remain cautious.

“The yuan resilience may encourage growing interest among local investors to reload gold inventories,” said Bernard Sin, regional director for Greater China at MKS.

Swiss customs data this week showed gold exports to China fell in May.

In Hong Kong, gold is sold at a discount of $1.8 per ounce to a $1.80 premium. In Singapore, dealers charge a premium of $1.20 to $1.70.

Wholesalers were quiet this week amid price volatility, said Brian Lan, managing director at GoldSilver Central dealers.

Japanese dealers sell gold at a par of $0.50 per ounce.

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