India Markets open in 6 hrs 53 mins

Indians stock up gold as price correction entices buyers

By Swati Verma and Rajendra Jadhav
·2-min read
FILE PHOTO: A salesman shows gold necklaces to a customer at a jewellery showroom in Kolkata

By Swati Verma and Rajendra Jadhav

BENGALURU/MUMBAI (Reuters) - Physical gold demand in India remained healthy this week as a drop in prices to a near five-month low encouraged retail consumers and jewellers to raise purchases in the midst of the wedding season.

"Jewellers are replenishing inventory after witnessing good demand during Diwali. The price is very attractive," said a Mumbai-based dealer with a bullion importing bank.

Local gold futures this week hit a low of 48,390 rupees per 10 grams, the lowest level since July 7.

Retail consumers have been making purchases for weddings after postponing them in the last few months, said a bullion dealer based in Ahmedabad in the western state of Gujarat.

Dealers were charging a premium of $5 an ounce this week over official domestic prices, inclusive of 12.5% import and 3% sales levies, up from last week's $2 premium.

In China, gold was sold at $17-$20 an ounce discounts to international spot price versus last week's $10-$16 range. Discounts of $3-$5 per ounce were offered in Hong Kong.

"We have seen an increase in activity this week primarily because of the significant drop in metal prices. So, we have seen drive towards retail interest," said Keanan Brackenridge, product manager at LPM Group Ltd.

Benchmark spot gold slipped to an over 4-month low of $1,800.01 an ounce this week.

Singapore premiums eased to $1.20 an ounce from $1.40 quoted last week.

"We've seen retail buying and also wholesalers covering their shorts, but surprisingly, we've seen quite a number of retail clients coming to sell," said Brian Lan, managing director at dealer GoldSilver Central.

People are taking profits and selling on worries that gold might breach $1,800 an ounce level on vaccine news, he added.

Bangladesh cut domestic gold rates by 2,508 taka ($29.70) this week.

"We had to reduce the rates despite unprecedented ups and down in the international gold market. I've never seen such kind of demand destruction happening," said Enamul Haque, president of Bangladesh Jewellers' Association.

($1 = 84.4500 taka)

(Reporting by Nakul Iyer and Eileen Soreng in Bengaluru, Rajendra Jadhav in Mumbai and Ruma Paul in Dhaka; Editing by Shailesh Kuber)