Gold dealers hope for wedding rush as price dip sparks demand

A salesperson shows a gold ring to customers at a jewellery showroom during Dhanteras. File photo: Reuters/Amit Dave

Physical gold demand picked up in major Asian hubs this week helped by a retreat in prices, with dealers in India prepared for a likely spurt in buying as the wedding season gathers pace.

With a correction in prices during the first half of the week, "jewellers have been making purchases at lower levels as they are witnessing healthy retail demand for weddings," said a Mumbai-based bullion dealer with a private bank.

Local gold futures fell to 47,253 rupees earlier this week, the lowest in a fortnight.

Dealers offered discounts of up to $1 an ounce over official domestic prices — inclusive of 10.75% import and 3% sales levies — versus last week's $2 discounts.

Gold has traditionally been an integral part of weddings in India, the world's second-biggest bullion consumer after China.

Lower prices drove a slight pick up in China and Japan as well.

Chinese customers were charged premiums of $4-$5 an ounce over benchmark spot prices, versus last week's $1-$4.

The country's monthly net gold imports via Hong Kong jumped 56% in October to the highest since June 2018.

Peter Fung, head of dealing at Wing Fung Precious Metals, said Chinese demand should remain healthy as Christmas approaches, adding a dip in global rates below $1,800 an ounce prompted a pick in purchases.

Benchmark spot prices hit a multi-week low of $1,777.80 on Nov. 24, although concerns over a new coronavirus variant drove a rebound on Friday.

"Demand has recovered a bit in Hong Kong as well, we can see more interest in jewellery," Fung added.

Premiums of $1 per ounce were charged in Hong Kong.

Meanwhile, the Singapore gold market has been very sluggish this week tracking a soft assets markets and the sharp selloff in equities, said David Mitchell, managing director at Indigo Precious Metals.

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