Demand for physical gold was much weaker than usual during a major festival in India, the world’s second-largest consumer, as near-record prices deterred retail buyers and forced traders to offer deep discounts.
Akshaya Tritiya, the second gold purchasing festival after Dhanteras, was celebrated on Friday.
“Many consumers have opted for token purchases of small pieces. The demand for jewelry has been very low compared to last year,” said a Mumbai-based jeweler, who said his sales during the festival were only two-thirds of last year’s figures.
“We didn’t expect demand to increase or reach last year’s level. But the drop in demand was much greater than our expectations.”
Domestic prices were trading around Rs 72,700 per 10 grams on Friday, not far from the record high of Rs 73,958 hit last month.
Prices have increased by more than 21% since the last Akshaya Tritiya festival.
“Retail buyers are finding it difficult to swallow the recent price increases, which have severely affected their purchasing power, said Prithviraj Kothari, president of the India Bullion and Jewelers Association.
Indian traders offered discounts of up to $7 per ounce from official domestic prices – including 15% import taxes and 3% sales taxes – compared to the $1 premium from last week.
In China, the largest consumer, traders have asked for bonuses $26 to $35 per ounce over spot benchmark prices, up from $18 to $20 last week.
“Demand is slightly subdued because prices are quite high. If they fall to $2,250, people will buy on the dips,” said Peter Fung, head of trading at Wing Fung Precious Metals in Hong Kong.
In Japan, traders sold gold at premiums of $0.5 to $1. Traders said demand increased slightly after the Golden Week holidays.
In Singapore and Hong Kong, gold was sold at prices ranging from parity with the standard to premiums of $2.50. (Reporting by Ashitha Shivaprasad and Brijesh Patel in Bengaluru, Rajendra Jadhav in Mumbai; Editing by Sonia Cheema)
