Second coronavirus wave stifles gold demand in India

Second coronavirus wave stifles gold demand in India
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India’s physical gold demand faltered this week as strict restrictions to contain the spread of COVID-19 kept buyers away, while activity in other top hubs remained largely muted due to higher prices.

Many Indian states have imposed curbs amid a record surge in infections.

The second wave has been badly affecting demand as many showrooms are closed due to restrictions, said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the city of Kolkata.

“Suddenly, demand has gone down. Consumers are also not willing to step out of their homes due to the outbreak,” he said.

Premiums eased to about $2 an ounce over official domestic prices, inclusive of 10.75% import and 3% sales levies, from last week’s $4.

“Jewellers have been reducing purchases because of weak retail demand. It seems demand would remain weak for the next few weeks considering the way cases are rising,” said a Mumbai-based dealer with a bullion importing bank.

This was in contrast to March, when Swiss monthly gold exports to India touched their highest since 2013, amid a gradual pick-up in demand.

In China, premiums of $8-$10 were charged over benchmark spot gold prices, against $7-$9 last week.

With premiums at these levels, “we don’t see anyone rushing to jump in. I expect a dip down to $3/$4 in order to trigger more buying interest,” said Bernard Sin, regional director, Greater China at MKS Switzerland.

In Hong Kong, premiums of $1.2-$1.8 an ounce were charged versus $0.50-$2 last week.

In Singapore, premiums stood around $1.6-$1.8, from $1.8 previously.

“Prices are higher so people are sitting on the sidelines,” said Brian Lan, managing director at dealer GoldSilver Central.

Wholesalers are rather quiet as supply chain disruptions due to COVID-19 measures have pushed up premiums, Lan added.

In Japan, premiums of $0.50 were being charged, amid weak demand.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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