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Asia gold demand picks up as Indian wedding season drives fresh buys
Gold demand in Asia gathered some steam this week on wedding season purchases in India, with prices swinging to a
MUMBAI/BENGALURU: Gold demand in Asia gathered some steam this week on wedding season purchases in India, with prices swinging to a premium there for the first time in over a month, and traders expecting demand to strengthen due to the upcoming Chinese New Year.
"The physical demand in Asia has been very good," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central, adding that premiums are also high due to a production shortage.
Dealers in India, the world's second-largest consumer of the metal, were charging a premium of up to $1 an ounce this week over official domestic prices, compared to a discount of up to $4 last week. The domestic price includes a 10 percent import tax.
"Cash supply is improving. Consumers are making purchases for weddings," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.
In November, Prime Minister Narendra Modi scrapped 500- and 1,000-rupee banknotes, or 86 percent of the value of cash in circulation, as part of a crackdown on corruption, tax evasion and militant financing.
"Banks and other agencies have reduced imports in the last few weeks. That's why despite moderate demand they could charge a nominal premium this week," said a Mumbai-based dealer with a private bank.
Gold imports in December fell 71 percent from a year ago to 31 tonnes as the cash crunch squeezed demand, said Sudheesh Nambiath, a senior analyst at GFMS, a division of Thomson Reuters.
In China, the world's top gold consumer, gold was sold at a premium of between $17 and $20 an ounce to the global benchmark, against a $20 to $22 premium in the previous week.
Traders are expecting a seasonally strong demand for yellow metal in China due to the upcoming Lunar New Year.
Gold on Friday slipped from the one-month high touched in the previous session on a surge in dollar, although bullion was on track to end the week about 2 percent higher.
Among other gold trading centres, bullion was sold at a premium of $1.40 an ounce in Hong Kong and Singapore, nearly unchanged from last week.
Prices in Tokyo, however, were at a discount of $1 per ounce this week.
