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 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 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 traded at par to premiums of $3, while in Japan, gold was sold at a premium of $1.
In Singapore, gold was traded at premiums of $0.50 to $2, versus last week’s $2.25 premium.
($1 = 92.39 Indian rupees)
(By Noel John and Rajendra Jadhav; Editing by Sherry Jacob-Phillips)
