Indian festive glitter fails to rub off on Asian gold demand | Reuters

 Indian festive glitter fails to rub off on Asian gold demand
| Reuters

By Rajendra Jadhav and Vijaykumar Vedala

MUMBAI/BENGALURU Gold demand in India spiked this week as festive buying lifted the premium over official domestic prices to its highest in 10 months, although buying elsewhere in Asia remained tepid. While a stronger dollar has kept prices of the yellow metal nearly flat this week, Asian consumers - outside of India - have generally stayed away from the safe haven asset, deeming prices to be high, analysts said.Gold prices in India, the world's second-largest consumer, were at a premium of up to $3 an ounce over official domestic prices this week, the highest in 2016 and against $2 the previous week, buoyed by purchases for the Dhanteras and Diwali festivals."Newspapers were flooded with advertisements from jewellers, who were offering discounts ... Customers started buying early in the morning and showrooms are crowded," according to Kumar Jain, a Mumbai-based jeweller.Demand in India usually strengthens in the final quarter as the country gears up for the wedding season soon after Diwali and Dhanteras, when buying bullion is considered auspicious.

India's overseas purchases of gold likely hit a nine-month high in October, as a flip in domestic prices to a premium prompted banks and refiners to resume imports ahead of the festival season.Gold prices in India have fallen around 8 percent since hitting a peak of 32,455 rupees per 10 grams in July, the highest in nearly three years."Demand has improved due to the festivals, but it is lower than normal," said Mangesh Devi, a jeweller based in Satara, Maharashtra.

Meanwhile, the world's largest consumer China witnessed a slowdown in purchases, with buyers waiting for a further fall in gold prices as premiums slipped to $2 from $4-$5 against the international benchmark last week. "Investment demand in China was strong in the first week of October when prices dropped below $1,300. Demand has been quieter these days though, with some who bought at lower levels taking profits," said Samson Li, an analyst with Thomson Reuters-owned metals consultancy GFMS.

Customers may be lured back if prices reach about $1,230 an ounce, analysts said. In Hong Kong, sellers were offering a premium of 50 to 70 cents an ounce, while in Singapore premiums were mostly unchanged at 50 cents compared with the 50-60 cents level in the previous week.Demand continued to remain tepid in the Japanese markets, with premiums flat for the second straight week. (Additional reporting by Nallur Sethuraman in Bengaluru; Editing by Mark Potter)

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

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Updated Date: Oct 28, 2016 22:04:05 IST

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