Indian gold market still muted, China looks to huge discount

A woman tries on a gold bracelet in a jewelry showroom in Siliguri. File / Reuters

Indian gold traders offered the biggest discounts in 8.5 months this week as COVID-19 restrictions choked consumption, while China’s top consumer opted for a discount for the first time since ending. January.

India’s official coronavirus infection tally has exceeded 28 million, with more than 2,500 deaths per day.

“Bullion dealers have offered big discounts as prices correct overseas and demand is weak in the local market,” said a Mumbai-based bullion dealer with a gold importing bank.

Dealers have offered discounts of up to $ 12 an ounce, the highest since mid-September 2020, off official domestic prices – including 10.75% import tax and 3% sales tax – against $ 10 in discounts last week.

“The jewelers were only asking for information as a few state governments are planning to ease lockdown restrictions. But they weren’t placing orders, ”said another Mumbai-based bullion trader with a gold importing bank.

A combination of resurgent COVID-19 cases and recent regulations has pushed Chinese gold prices down to as much as $ 20 to $ 50 an ounce from international spot prices against premiums of $ 6 at $ 7 earlier in the week, traders said.

Last week bonuses of $ 7 to $ 10 were paid.

China’s central bank released a revised anti-money laundering bill on June 1, covering accounting firms and precious metal exchanges.

This follows a crackdown on lenders selling investment products linked to commodity futures to family buyers.

Bernard Sin, Greater China regional manager at MKS, said discounts were as high as $ 50, possibly due to newly imposed regulations, and larger discounts could be considered in the future.

“Guangzhou has seen an increase in COVID-19 cases, resulting in a complete lockdown, affecting all gold manufacturers,” Sin said.

Singapore premiums were little changed at $ 1.2-1.7.

Brian Lan, general manager of reseller GoldSilver Central, said there were more sales from jewelers, pawn shops and retailers due to the price hike earlier in the week, although demand grew. has been improved since.

Gold rebounded from a more than two-week low on Friday after an increase in non-farm payrolls in the United States fell below expectations, even though bullion was still on track to record its biggest drop weekly since March.

Spot gold jumped 0.9% to $ 1,886.80 an ounce at 9:43 am, after hitting its lowest level since May 19 at $ 1,855.59 earlier. It was down 0.8% for the week so far.

US gold futures gained 0.9% to $ 1,890.80.

“We are seeing a modest rally following the slight drop in the nonfarm payroll… more than a few market watchers were looking for a much larger number and when that did not happen the market bulls in the Gold kind of breathed a sigh of relief, ”said Jim Wyckoff, principal analyst at Kitco Metals.

“The rebound we saw today maintains the uptrend of the daily chart in the gold market, and that’s encouraging for the bulls.”

The dollar index fell from a three-week high, making gold affordable for holders of other currencies, while benchmark 10-year yields also fell.

“Part of what we are seeing in terms of the strength of gold are inflation expectations and these are in part based on stronger economic data, like higher job growth, a stronger recovery. wide in the United States, parts of Europe and China are still doing well, ”said Jeffrey Christian, Managing Partner of CPM Group.

“Gold prices will likely continue to trade between $ 1,855 and $ 1,920 an ounce.”

gold is often seen as a hedge against inflation.

Silver gained 1% to $ 27.71 an ounce and was on track for its biggest weekly decline since late March.

Separately, copper prices rebounded on Friday as investors scooped lower-priced hardware after yesterday’s heavy losses, fearing strong US economic data could prompt monetary policy tightening.

Three-month copper on the London Metal Exchange (LME) had gained 1.8% to $ 9,960 a tonne at 2:00 p.m. GMT, after losing as much as 3.8% in the previous session.

Copper hit a record high of $ 10,747.50 last month, fueled by optimism about the global economic recovery and new demand for an expected green revolution, including the switch to electric vehicles.

“It is rebounding today because of the bargain hunt. The overall attitude is still bullish for industrial metals and commodities in general, ”said Carsten Menke, analyst at Julius Baer in Zurich.

“Industrial metals fundamentals are good, but expectations have been overkill as to where prices should be based on the fundamental backdrop.”

In China, prices fell to their lowest in nearly six weeks, with the most-traded copper contract in July on the Shanghai Futures Exchange falling 3.6% to 70,470 yuan ($ 11,001) a tonne.

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