MUMBAI: Top Asian hubs saw firm demand for physical gold this week in the run up to the Lunar New Year holiday, while buyers in India held off making purchases before the government announces its annual budget.
India’s budget for the next fiscal year will be presented on Feb. 1. New Delhi cut the import tax on gold in its 2021/2022 budget.
“People are speculating that the government might change the duty structure like last year,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
Volatile domestic gold rates were also prompting potential buyers to postpone purchases, said a Mumbai-based bullion dealer with a bullion importing bank.
Dealers offered discounts of up to $3 an ounce over official domestic prices - inclusive of 10.75% import and 3% sales levies - up from last week’s $2.5 discounts.
India’s gold consumption is expected to rise further in 2022 after jumping 79% last year as pent-up demand and an improvement in consumer confidence are seen boosting retail jewellery sales, the World Gold Council (WGC) said on Friday.
In top consumer China, premiums widened to $4-$7 an ounce over benchmark spot gold rates. Hong Kong saw premiums stable at $0.50-$2.00.
Inflation worries could help demand even after Lunar New Year festivities, Peter Fung, head of dealing at Wing Fung Precious Metals said.
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