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Business News/ Money / India resilient during wedding season; premiums soft
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India resilient during wedding season; premiums soft

India resilient during wedding season; premiums soft

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Singapore/Mumbai: Jewellers in India, the world’s largest gold consumer, returned to the physical market after bullion dropped from a record, but sales of scrap persisted in other parts of Asia on Tuesday, cutting premiums.

Holders in Indonesia sold back gold for cash, while retail investors in Japan were still keen to take profits, with bullion within sight of last week’s lifetime high at $1,194.90 an ounce despite a recent correction.

Gold was steady at $1,179 an ounce on Tuesday, having tumbled as much as 5% on Friday after news that Dubai planned to delay repayments of billions of dollars in debt revived fears about another global credit crisis.

Premiums for gold bars weakened slightly to 30 US cents an ounce to the spot London prices from 40 cents last week in Singapore, although there were also offers at 60 cents which suggested that buyers were chasing bullion at lower levels.

“Demand for gold is there, and being much talked about, but it is like a little lollipop. It is half of what we generally see at this time of the year," said Haresh Acharya of Parker Agrochem Exports Ltd, a precious metals wholesaler in Ahmedabad.

“People who have weddings are buying now at the last hour as earlier they kept waiting for lower levels that never came," he added.

Gold jewellery is presented as a gift at Hindu marriages in India and forms an essential part of the dowry basket during the wedding season, which lasts until the end of December.

But record gold prices have curbed demand and ignited sales of scrap in India, with imports only reaching 18 tonnes in November, or nearly halved from the 34 tonnes in November 2008, according to the Bombay Bullion Association.

“We are having the normal rush of sellers. There are not many buyers at this point. I don’t have people selling gold bars to raise money for any falls that they may have had on the stock market," said Kapilkumar of Chokshi Arvind Jewellers, which trades gold scraps in Mumbai.

Although sales of scrap persisted in Asia, dealers also noted short covering whenever gold slipped. Premiums for gold bars were steady in India at between 40 and 70 cents.

“The majority of consumers are buying on dips. I guess gold will be trading in a range of $1,150 to $1,200 and I still see physical demand from India," said a dealer in Singapore.

“It’s possible that a strong rupee helps," he said.

The rupee rose after the dollar fell against major currencies as investors took the view that Dubai’s debt woes will likely be contained, reducing safety bids for the greenback.

Gold premiums slipped to 20 cents from 30 cents in Hong Kong, while the discount was barely changed at $1 in Tokyo as demand from investors and the electronics sector tapered off.

“The demand from the physical side is slow at the year-end. Manufacturers buy less to reduce their inventories. They need more cash in hand," said Dick Poon, manager of precious metals at Heraeus in Hong Kong.

“I think manufacturers and the industrial sector have already replenished their stocks in the past two months."

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Published: 01 Dec 2009, 01:38 PM IST
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