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Gold dealers in India charge premium on limited supply

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Gold prices flipped to a premium last week in India due to limited supplies even as demand remained subdued, while other Asian regions barely saw any holiday purchasing.

Bengaluru

GOLD prices flipped to a premium last week in India due to limited supplies even as demand remained subdued, while other Asian regions barely saw any holiday purchasing.

Indian dealers were charging a premium of up to US$1 an ounce over official domestic prices last week, compared to a discount of US$2.50 an ounce a week ago. The domestic price includes a 12.5 per cent import tax and 3 per cent sales tax.

Supplies are limited as most of the international suppliers are on leave, allowing sellers to charge a premium, said a Mumbai-based dealer with a private bullion importing bank.

"Gold could start trading in discount once supplies improve," the dealer added.

Gold futures in India, the world's biggest gold consumer after China, rose for a fourth straight session to a nearly four-month high of 38,980 rupees (S$738). Chinese gold traders offered premiums of US$4-5 an ounce over the benchmark, little higher than last week's US$3-5 an ounce.

"The premium has definitely improved, but physical demand - especially jewellery - remains weak," said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS. "There is always buying for Christmas and New Year due to seasonal demand but this year, sales have been softer compared to the previous years."

Demonstrations in Hong Kong against Beijing's influence continued to hurt tourism, resulting in subdued physical purchasing of the safe-haven metal.

Premiums in Hong Kong ranged between flat to US$0.30 an ounce, compared with the prior week's US$0.20-0.30 an ounce.

"The situation in Hong Kong is ongoing, demand is getting impacted as well because of that," said Dick Poon, general manager at Heraeus Metals Hong Kong Ltd. "Normally before Chinese New Year, we see some demand in the market. But this year, we are seeing a lot of uncertainty."

Traders in Singapore charged premiums of US$0.60-0.80 an ounce over the benchmark, the same as last week, but demand is expected to improve in January ahead of the Chinese New Year, traders said. REUTERS