Asia Gold: India discounts widen to 6-month high, China sees New Year boost

ASIA GOLD RATES: Gold discounts in India widened to six-month highs this week as a rise in domestic prices dampened demand and jewellers awaited the annual federal budget, while physical gold demand in China was solid ahead of the Lunar New Year festival.

The rebound in gold prices has hammered demand, and buyers are now waiting for prices to correct, said a Mumbai-based dealer with a private bullion importing bank.

Domestic gold prices in India rose to 79,270 rupees ($915.60) per 10 grams this week and were not far from all-time highs, tracking gains in international spot gold rates that hit a one-month peak.

Indian dealers offered a discount of up to $30 per ounce over official domestic prices, inclusive of 6% import and 3% sales levies, up from the last week’s discount of $17.

Importers and bullion dealers offered higher discounts as they wanted to clear imported stocks before the annual budget on Feb. 1, when the government could change the duty structure, said Chanda Venkatesh, managing director of Hyderabad-based bullion merchant CapsGold.

“Physical gold demand could face challenges in India as the government considers reviewing the 9% import duty cut it made in July 2024,” ANZ said in a note.

The bank expects China’s demand to recover after falling in the second half of last year, as a pledge by the country to use easing monetary policy and fiscal expansion to boost economic growth is likely to support physical gold demand.

In top consumer China, dealers charged premiums of $3-$13 per ounce above international rates , versus discounts of $2 per ounce to $9 premium last week.

Demand has increased ahead of the Chinese New Year, but trading volumes have thinned as many people have started their holiday break, said Peter Fung, head of dealing at Wing Fung Precious Metals.

In Singapore, dealers charged par level to a $1.80 premium, a trader said. In Hong Kong, gold was sold at par level to a $2 premium.

In Japan, bullion was sold from a discount of $0.5 to a premium of $0.5.

($1 = 86.5770 Indian rupees)