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Lower prices, festive demand boost gold purchases in India, Singapore
GOLD demand was robust in India and Singapore this week as a correction in prices ahead of a key gold-buying festival boosted purchases even as major centres such as China and Japan were closed for most of the week due to holidays.
Gold demand spiked in India as a fall in prices to the lowest level in more than four months boosted retail purchases. "Jewellers are aggressively buying as retail demand has improved due to falling prices," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.
Local gold futures fell to 31,250 rupees (S$615.5) per 10 grams on Thursday, the lowest since December 21.
Retail demand is likely to remain robust in May due to the wedding season and the annual Akshaya Tritiya festival, which this year will be celebrated on May 7.
Hindus believe that there is only one day in the calendar year that is the most auspicious for buying gold and that is Akshaya Tritiya. On this day, as illustrated in Hindu mythology, "gold will beget even more gold", if it is bought during a certain period during this day called a "muhurtha".
Gold is also an essential part of a bride's dowry in India and also a popular gift from family and guests at weddings. In India, dealers were charging a premium of up to US$2 an ounce over official domestic prices this week, unchanged from last week. The domestic price includes a 10 per cent import tax and a 3 per cent sales tax.
India's gold demand is expected to rise in the June quarter from a year ago due to a higher number of auspicious days for weddings and a fall in local prices ahead of a key festival, the World Gold Council said on Thursday. Gold smugglers in India have slowed their operations over worries their shipments will be caught up in seizures of cash, bullion, booze and drugs that are aimed at controlling vote-buying in the country's national elections.
Meanwhile, comparatively lower prices this week supported demand in other Asian centres as well, with premiums in Singapore staying around US$1 an ounce, unchanged from last week.
Spot gold is down about 1.1 per cent so far this week. "As the price level came down, we saw an increased demand from retail, and especially wholesalers as Akshaya Tritiya is coming up. Prices are now in favour of buyers this year ahead of the festival unlike in the last few years," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
In Hong Kong, premiums were mostly unchanged at 60 cents-US$1.20 with a slight uptick in retail demand due to the fall in prices. REUTERS