Asia Gold-Indian dealers offer discounts, China hopes for post-COVID demand recovery

Rajendra Jadhav and Bharat Gautam
·2 min read

* India sees discount of up to $2/oz vs $5.5 premium last week

* Shanghai eased COVID-related restrictions this week

By Rajendra Jadhav and Bharat Gautam

May 20 (Reuters) - Gold flipped to discount in India this week even as retail demand remained robust because of the wedding season, while easing of COVID restrictions boost hopes of demand improvement in top-consumer China.

Gold was sold at discounts of about $2 per ounce to at par with global benchmark spot rates in China, versus $6-$8 discounts last week.

"We need to see (China) lockdowns come to an end for demand to notably pick up," said Matt Simpson, City Index's senior market analyst.

Shanghai eased COVID-related restrictions this week, but officials are wary of the dangers of new infections on their high-stake efforts to gradually reopen, and are hence planning to keep most residents largely indoors this month.

A return of demand from China after lockdowns ease could help arrest gold price declines, but "we don't think this demand will be strong enough on a sustained basis to turn prices around for prolonged periods," JP Morgan Research said in a note this week.

In India, dealers were offering a discount of up to $2 an ounce over official domestic prices — inclusive of the 10.75% import and 3% sales levies, down from last week's premium of $5.50.

"Retail buying has been picking up because of ongoing wedding season," said Harshad Ajmera, a gold wholesaler in Kolkata.

Local gold prices were trading around 50,700 rupees per 10 grams on Friday, after hitting a 3-month low of 49,572 rupees earlier this week.

Jewellers were replenishing inventories this week as retail sales were robust during Akshaya Tritiya festival earlier this month, said a Mumbai-based dealer with a private bullion importing bank.

In Hong Kong, gold was sold anywhere between a discount of $1-$2, while Singapore saw $1.20-$1.60 an ounce premiums.

In Japan, gold changed hands between a $0.5 premium to on par with global rates, Tokyo-based traders said. (Reporting by Bharat Govind Gautam, Swati Verma, Arpan Varghese in Bengaluru, Rajendra Jhadav in Mumbai; Editing by Shinjini Ganguli)

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