Gold Discounts in India Rise To Record High On Import Duty Hike; China Premiums Firm
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Dealers in India offer discounts of up to $207 an ounce over official domestic prices, including 15% import and 3% sales taxes.
The sudden price jump made investors sell, and both jewelers and retail buyers stayed away.
Gold discounts in India reached a record high this week after a sharp increase in import duties slowed demand and led investors to sell, while investment demand kept gold premiums steady in China. Dealers in India offered discounts of up to $207 an ounce over official domestic prices, including 15% import and 3% sales taxes, compared to last week’s discounts of up to $15 and premiums of $6.
The sudden price jump made investors sell, and both jewelers and retail buyers stayed away, according to a jeweller in Hyderabad. Earlier this week, India raised import tariffs on gold and silver to 15% from 6% and limited duty-free gold imports for jewelry exports to 100 kilograms per license.
Domestic gold prices in India were around 160,500 rupees per 10 grams on Friday, after reaching 164,497 rupees earlier in the week, the highest in over two months. Discounts rose sharply as demand almost disappeared and scrap gold supplies increased, said a bullion dealer in Mumbai.
ANZ noted that strong demand from China may balance out weaker demand from India after these policy changes. In China, gold traded at premiums of $15 to $20 an ounce over the global benchmark, similar to last week. Premiums stayed steady, supported by strong investment demand and aggressive industrial buying, especially after the removal of VAT export rebates, according to Bernard Sin from MKS PAMP.
Spot gold prices have dropped 2.8% this week as higher energy prices raised inflation concerns and expectations of higher interest rates. In Hong Kong, gold traded at par to premiums of $2, in Japan at a $0.50 discount, and in Singapore at premiums of $1 to $3.30.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – Reuters)
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