India gold demand ticks up as prices dipped last week

Gold demand in India improved slightly last week as softer prices drew in jewellery buyers even as caution prevailed, while premiums in China eased. Demand improved as the recent price correction drew buyers back, particularly for jewellery purchases, said Chanda Venkatesh, managing director at CapsGold, a bullion merchant based in the southern city of Hyderabad.

Dealers quoted discounts of up to USD35 an ounce over official domestic prices, inclusive of 15 per cent import and 3 per cent sales levies, down from last week’s discounts of up to USD87. While jewellers have started restocking, purchases remain measured as confidence in retail demand for the coming months is still weak, said a Mumbai-based bullion dealer with a private bank.

Last month, India raised import tariffs on gold and silver to 15 per cent from 6 per cent as part of efforts to ease pressure on foreign exchange reserves from higher oil prices. India’s physically backed gold exchange-traded funds logged their first net monthly outflow in a year in May, as investors booked profits following a sharp rise in prices triggered by higher import duties.