India Flips To Discount On Physical Gold Amid Low Demand, Record Price

Physical gold rates flipped to a discount in India this week as domestic prices surged while China's discounts slipped further on weak retail demand, with silver emerging as a preferred asset in most Asian hubs. In India, dealers offered discounts of up to $6 an ounce over official domestic prices in thin trade, versus last week's $2 premium. Domestic gold futures soared to a record Rs 50,948 ($681.21) per 10 grams on Friday.

"Nearly 50 per cent jewellery stores are closed due to the lockdown. Retail demand is weak, but could improve next month during the Onam festival," said B Govindan, chairman of Kochi-based Bhima Jewellery.

Global benchmark spot gold prices held near a nine-year peak, close to the $1,900 an ounce level, on safe-haven investment demand, while silver eyed its best week in over three decades.

In top buyer China, discounts widened to $37-$20 per ounce over global benchmark prices from last week's $30-$25, with activity still very quiet.

"People are taking advantage of the gold price to sell in the market," said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS, adding that investors were increasingly moving toward silver.

Dealers in Hong Kong charged anywhere between $0.5 per ounce discount to a $1.5 premium, while premiums in Singapore widened to $0.8-$1.50 an ounce from $1.50 last week.

Despite some buying from high net worth clients, a lot of retail investors and business were selling gold, Brian Lan, managing director at dealer GoldSilver said, adding, new clients emerged for silver after global spot rates breached $20.

In Japan, premiums of $0.25-$0.50 per ounce was charged.

Meanwhile, the Bangladesh Jewellers Association raised local rates to a record high, citing the rally in international markets.

The new rates, with the best quality gold priced at 72,783 taka ($860.01) per Bhori, or 11.664 grams, came into effect from Friday.

($1 = 84.6300 taka = 74.7904 rupees)