The Demand for physical Gold remained less for much of the week in the major Asian cities with elevated rates impeding gold purchases. Although, the Indian Jewelers have stocked up for the soon approaching festive season as a result of the drop in the local rates to more than six weeks low on Friday, 27th September 2019. Buying and Wearing Gold Jewelry in India on festivals is considered auspicious as per Hindu norms. Around the festival of Diwali, a lot of people buy gold especially on the occasion of Dhanteras that is a part of the 5-day Diwali Festival in India.
The Gold futures were trading around 37,445 rupees per 10 grams on Friday, 27th September 2019 after dropping to a low of 37,399 rupees earlier in the day. It has dropped to the lowest level since 13th August 2019. A Mumbai based dealer at a Bullion importing private bank said: “The phone was ringing continuously (today). Jewelers were placing orders from across the country.”
The Gold Dealers were offering a good discount of up to $12 an ounce to official domestic prices on 27th September 2019, Friday, down from a $40 discount on 26th September 2019, Thursday and up to $47 in the previous week. The domestic price of gold includes a 12.5% import tax and a 3% sales tax.
A Bullion dealer based in Kolkata said: “Retail demand, however, has remained lackluster this whole week because of the Shradh period (It is a Hindu ritual that a family performs to pay homage to one's 'ancestors', especially to one's dead parents) which is considered inauspicious for buying new things or bullion.
"From next week onwards, the retail demand will start improving rapidly," he added. "We are entering a peak festive season including major Hindu festivals such as Diwali and Dusshera."
The Demand for gold usually begins to strengthen in the final quarter as India gets ready for the big Hindu festivals such as Diwali and Dussehra during which it is believed to be auspicious to buy gold and other new things.
A Singapore dealer GoldSilver Central's managing director, Brian Lan, said that the demand for gold could be tempered during the peak festive period if the prices remain very high, noting a six-year peak scaled early this month. In China, the world's biggest consumers of Gold and dealers charged premiums in a range of about $8 to $12 an ounce over the benchmark, compared with $10 from a week ago. Premiums in Hong Kong were kept largely unchanged for the third week running, in an approximate range of 50 cents to $1, as said by the traders, showing the recent civil rights protests for curbed or restrained jewelry demand.
There have been a few investments in the bullion sector as the US-China trade war as well as the Hong Kong protests increased safe-haven interest in gold buying, but an overall demand has been muted, according to a trader based in Hong Kong.
The gold prices rose to a more than two-week high earlier in the week, global benchmark spot gold prices are now on track for a weekly decline of about 1.8%. The Premiums in Singapore were seen at 50-80 cents an ounce, as compared with 55-75 cents an ounce in the last week. In Japan, gold was sold on par with the benchmark, according to a billion trader based in Tokyo, Japan.
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image source-The Hindu