Gold gets its festive shine back as lower prices lure Asian buyers

Lower gold prices are beginning to bring physical buyers back into key Asian markets, with demand improving in India and signs of increased buying interest in Singapore. However, some buyers continue to wait for prices to fall further before stepping into the market.Gold prices in the country drop to Rs 145,538 per 10 grams this week, the lowest level in nearly two months. The correction brought more buyers into the market compared with the previous week and also resulted in sellers offering smaller discounts.Harshad Ajmera of Kolkata-based wholesaler JJ Gold House said demand had improved as the price decline made buyers more interested.“Demand was better than last week as prices corrected, making buyers more interested and narrowing the discounts offered by sellers,” he told Reuters.Discounts in India narrowed sharply during the week. Dealers offered discounts of as much as $14 an ounce over official domestic prices, including 15% import and 3% sales levies. This was significantly lower than the discounts of up to $43 an ounce offered the previous week.Buying interest could strengthen further if prices remain around current levels, particularly with the festival season approaching. A Mumbai-based dealer with a private bank said jewellers and investors were showing greater interest.“Gold could start trading at a premium next week if prices stay around current levels. Jewelers and investors are now showing more interest in buying as festival season is approaching,” said the dealer.India will celebrate Dussehra this month, followed by Diwali in early November. Buying gold is considered auspicious during the festive period.China, the biggest consumer market, also saw physical gold trade above the global benchmark, with bullion fetching premiums of $5 to $10 an ounce. However, buyers there remained closely focused on price movements.Bernard Sin, regional director, Greater China at MKS PAMP, said periods of price consolidation or declines were prompting greater buying activity, while another fall in international prices could further support physical demand."Demand remains highly price-sensitive, with buyers being more active during periods of price consolidation or pullbacks. A further decline in spot gold prices could therefore provide additional support to physical volumes," said Sin.The physical market activity comes as international spot gold prices headed for a weekly decline on Friday. Prices had already fallen by more than 6% in September.Elsewhere, gold in Singapore changed hands within a relatively narrow range, from a $1.5 an ounce discount to a $1 premium. Hong Kong saw prices move between a $1.5 discount and a $0.5 premium.Singapore also recorded signs of stronger physical buying, based on dealer inventories."We are noticing an uptick in physical demand in Singapore, based on dealers' inventory," Hugo Pascal, a precious metals trader at InProved told Reuters.Japan's physical gold market remained within a similarly narrow range, with the metal sold at discounts of up to $0.25 an ounce or premiums of as much as $0.5.You use AI every day. Now get your AI Quotient. Take the AIQ test.