Gold discounts in India widened
this week to their deepest point in nearly a decade as demand
stayed subdued and some traders steered clear of paying import
duties, while escalating Middle East tensions boosted safe-haven
demand in China.
“A few importers (to India) are declaring gold as
platinum-studded jewellery at customs even though it contains
more than 90% gold. They are able to sell this duty-free gold at
a sharp discount,” said a Mumbai-based bullion dealer.
Gold imports attract a 6% import duty, while
platinum-studded jewellery can be imported duty-free.
Bullion dealers in India this week offered a discount of
<XAU-IN-PREM> up to $83 per ounce over official domestic gold
prices, inclusive of 6% import and 3% sales levies, the highest
since July 2016. Last week, they were offering a discount of up
to $28.
“Jewellers are not buying as retail demand is very weak and
they are busy closing their accounts for the financial year,”
said a Mumbai-based dealer with a gold-importing private bank.
Meanwhile, in top consumer China, bullion traded at premiums
of $20-$30 an ounce over global benchmark prices <XAU-CN-PREM>
this week, sharply above last week’s $13-$15 premium.
“No new import quotas have been issued so far in March,
restricting inflows of physical… The PBOC’s dual strategy –
steady reserve accumulation combined with tight quota control –
keeps the domestic market resilient yet constrained,” said
Bernard Sin, regional director of Greater China at MKS PAMP.
China’s central bank extended it gold buying spree for a
16th consecutive month.
“Physical demand (for gold in China) is still very good
because of the conflict in Middle East, people still would like
to buy the gold as a safe haven,” said Peter Fung, head of
dealing at Wing Fung Precious Metals.
In Hong Kong, physical gold <XAU-HK-PREM> traded at par to
premiums of $3, while in Japan <XAU-SG-PREM>, gold was sold at a
premium of $1.
In Singapore <XAU-SG-PREM>, gold was traded at premiums of
$0.50 to $2, versus last week’s $2.25 premium.