The festival of Diwali sparked fresh demand for physical gold in India this week, while consumers in top hub China were still subject to elevated premiums as supply remained low.
“Retail demand gained momentum this week because of Diwali. Prices were also attractive,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
The steady demand gave room for dealers to charge premiums of up to $3.5 an ounce over official domestic prices – inclusive of 15% import and 3% sales levies – from around $2.5 premiums last week.
Domestic prices were around 50,456 rupees per 10 grams on Friday.
Jewellery demand was slightly lower than last year during the festival, but investment demand in the form of coins and bars was robust, said a Mumbai-based bullion dealer with a private bank.
Dealers in top consumer China charged premiums of $23-$45 an ounce over global spot prices, versus $27-$40 last week.
The high premiums indicate strong physical demand and the re-opening of the Chinese economy could still see stronger demand over the coming months, said UBS analyst Giovanni Staunovo.
China’s central bank controls how much gold enters the country via quotas to commercial banks. Lately, there has been no indication of fresh quotas as the PBOC tries to stem the outflow of the yuan.
“PBOC had intervened to defend RMB from depreciation this week, hence we reckon no import quota to be issued near term,” Bernard Sin, regional director, Greater China at MKS PAMP.
The China Gold Association said that while the country’s COVID restrictions did slow consumption during January-September, demand has been recovering since.
In Hong Kong, bullion changed hands at $1-$3 an ounce premiums and in Singapore, at $1.50-$2.50 over the global spot rates. Japanese dealers sold bullion between at par to $0.50 premiums.