Spring festival, weddings lift physical gold demand | Reuters - Firstpost
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Spring festival, weddings lift physical gold demand | Reuters

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SINGAPORE/MUMBAI China's gold demand picked up this week as people bought gifts ahead of the spring festival while purchases for wedding jewellery drove up sales of the precious metal in India.

Investment demand for physical gold stayed subdued in top importing countries with prices moving in a range and few expecting the metal to rally, dealers said.

"With the spring festival approaching, there is some increase in demand as people are buying gifts. We expect the demand to pick up towards the end of the month as the spring festival is in early February," said Shu Jiang, chief analyst, Shandong Gold Group.

Premiums on Shanghai Gold Exchange, the platform for all physical gold trade in China and a good indicator of demand in the country, held at $2-$3 this week as compared with $4-$5 a week ago.

In India, the world's second largest gold consumer, the metal started trading at a premium this week, as a correction in prices slightly improved demand.

"Those who have weddings next month are purchasing gold. However, some buyers are still expecting correction in prices," said Kumar Jain, vice-president, Mumbai Jewellers Association.

In India, gold is an essential part of the bride's dowry and also a popular gift at weddings.

Dealers in India were charging a premium of up to $1 an ounce to global prices after offering a discount of up to $1.50 last week.

Indian gold prices have corrected nearly 2 percent after hitting a two-month peak of 26,123 rupees per 10 grams last week.

Demand from rural areas remained sluggish as earnings of Indian farmers have drained out by the first back-to-back drought conditions in nearly three decades. Rural demand accounts for about two-thirds of India's total gold consumption.

"Investment demand is weak. People are confused over gold price outlook," said a Mumbai-based bullion dealer with a private bank.

Investors in Japan are preferring to buy platinum instead of gold, said a Tokyo-based dealer.

"Platinum is cheaper than gold, hence, people are investing in 100-gram and 500-gram platinum bars here," the trader added.

Platinum has traded at a discount to gold since January 2015 as South African producers ramped up production after a long strike.

Gold was trading almost at par with international prices in Japan.

(Editing by Sherry Jacob-Phillips)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Jan 15, 2016 16:01 IST

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