Advertisements
Home Gold News Record Prices Dull Demand for Gold in India Ahead of Diwali

Record Prices Dull Demand for Gold in India Ahead of Diwali

by anna

As gold prices continue to hit record highs, physical gold dealers in India are experiencing a decline in demand ahead of the upcoming Diwali festival. The domestic price of gold has surged to an unprecedented 77,641 rupees ($923.85) per 10 grams, a 15% increase from the 67,400 rupees low observed in July.

The ongoing rally in gold prices is leading to reduced consumer purchases. Bachhraj Bamalwa, a partner at Indian jewelry retailer Nemichand Bamalwa & Sons, stated, “The ongoing price rally is slowing down the demand. Consumers are buying less volume because they need to allocate far more money if they want to buy the same volume they planned with the rising prices.”

Advertisements

To address this dip in consumer interest, Indian dealers have begun offering discounts of up to $8 an ounce below official domestic prices, which includes a 6% import duty and a 3% sales tax. This discount contrasts sharply with the $3 premium dealers quoted just last week.

Advertisements

With Diwali—a significant occasion for gold purchases—approaching in late October, many jewelers are expressing concerns about their sales. A Mumbai-based bullion dealer mentioned, “Jewellers aren’t feeling too confident about Diwali sales this year due to rising gold prices. To keep customers interested, many are offering discounts on jewelry making charges to help boost their sales during the festive season.”

Advertisements

In contrast to India, discounts offered by Chinese dealers have narrowed, now ranging between $3 to $14 below international spot prices, compared to the $15 to $31 discounts observed last week. In Hong Kong, gold was sold at prices between a $2 discount and a $1.20 premium over spot prices.

Advertisements

Despite recent policy stimulus aimed at revitalizing the economy, Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong, indicated that retail gold demand in China remains weak. “Chinese demand is unlikely to recover in the next three months as prices will rise further,” he noted.

In Singapore, gold prices are reported to be sold at a discount of $0.80 to a premium of $2.20.

As the festive season approaches, the high gold prices are dampening demand in key markets like India and China. Jewelers are taking steps to mitigate this impact, but the outlook remains uncertain as geopolitical and economic factors continue to influence gold prices. With Diwali just around the corner, the coming weeks will be crucial for both retailers and consumers in the gold market.

You Might Be Interested In

Advertisements

You may also like

Lriko logo

Lriko is a gold portal website, the main columns include gold pricespot goldsilver pricespot silvergold futures, nonfarm payroll, gold basics, gold industry news, etc.

© 2023 Copyright  lriko.com