Physical gold is reportedly available at a discount in India in rare cases amid weak domestic demand, while a surge in Chinese buying has pushed international prices above $1,300.
The spot premium in India has been quoted as at little as $1-2 per ounce on 1kg bars, market sources told FastMarkets, although some importers are said to be keen to offload metal at a discount rather than holding onto it.
“Some importers have been forced to sell at a discount as the price to hold the metal is too much,” one source told FastMarkets.
In December, India imported just 29 tonnes of gold, down sharply from 150 tonnes in the previous month – a drop in demand and confusion over changes to the country’s legislation governing imports led to a dramatic fall in the amount of metal coming into the country.
Importers were said to be awaiting clarification on import duties and were thus reluctant to bring in metal following the abolition of the 80:20 rule at the end of November. Buyers are also likely to be well stocked after the strong run of imports in the second half of last year.
While no official announcement has been made, Metals Focus’ Chirag Sheth said that importers are now more confident in the system and understand that there are now no limitations to the amount of metal that can come into the country.
“The clarification is now there but demand is not,” he said.
According to sources, just 16 tonnes of gold has been imported into India so far in January, far short of the 2010-2013 average of 90 tonnes albeit in line with the 33 tonnes that were imported across the whole of January 2014.
Jewellery demand, however, remains strong – sources indicated that many banks are urging jewellers to buy up more metal.
In China, demand remains robust ahead of the Lunar New Year, which has been is a key driver of the 10-percent climb in gold prices this year, although premiums there are starting to ease back.
The premium in Shanghai was reported at just $3 over spot, although highs of $6 have been seen at some stages.
Importers are bringing less metal into the country to ensure they do not exceed their quotas – China strictly controls how much gold the banks can import through a quota system – while demand, although robust, is not as strong as it was last year, Bernard Sin at MKS said.
SGE withdrawals – a useful barometer for Chinese domestic demand – in the first full week of 2015 were 61 tonnes, close to the top end of last year’s range and the highest weekly figure since early October but down from around 79 tonnes in the first full trading week of last year.
SGE withdrawals for the whole of January 2014 were just short of 250 tonnes, with total withdrawals of 2,102.36 tonnes over the full year, down 95 tonnes on the 2013 total of 2,197 tonnes.
Still, year-on-year comparisons are complicated by the fact that Chinese New Year falls 19 days later in 2015 than it did last year. January is usually a key period for Chinese consumers to acquire gold ahead of the New Year.
Spot gold on international markets is currently trading at $1,300 per ounce, up from $1,182 at the start of the year.
Elsewhere, the Hong Kong premium was up slightly at $1.50, as was the Singapore rate at $1.50, while the Dubai premium dropped to $0.50.
(Editing by Mark Shaw)
The post Mumbai gold available at discount, 16 tns imported so far in Jan appeared first on The Bullion Desk.
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