India’s gold discounts are widening as scrap supplies increase

Gold Discount: Physical gold discounts extended in India as scrap supplies climbed despite only a minor recovery in demand, while purchases in top consumer China remained stable despite COVID-19 lockdowns as investors sought safe-haven assets. Dealers offered a discount of up to $40 per ounce over official domestic pricing, including the 10.75 percent import and 3% sales taxes, up from $35 last week.

According to a Mumbai-based dealer with a bullion importing bank, the Gudi Padwa festival, also known as Ugadi, was celebrated over the weekend, but jewelers reported lesser sales than usual. Because of rising prices, the flow of old jewelry and coins, also known as scrap supplies, increased, lowering the need for imports, according to the merchant.

Gold discount in China

Gold prices in China ranged from a $3 discount to a $2 premium, compared to a discount of $2 to $6 an ounce in the previous week on global benchmark spot rates. Because of the Ukraine issue, people are still interested in buying gold as a safe haven, according to Peter Fung, head of dealing at Wing Fung Precious Metals.

With COVID-19 limitations in place throughout some major cities, markets were quiet but steady. Gold prices in Hong Kong ranged from a $3 discount to a $2 premium per ounce on spot prices, while premiums in Singapore ranged from $1.20 to $1.60 per ounce, up from $1 to $1.80 last week. 

“Investors may be coming in to buy gold since the longer-term outlook is favorable,” said Brian Lan, managing director of GoldSilver Central, who added that high inflation would drive demand. Gold was sold in Tokyo from a $1 discount to a 50 cent premium. 

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