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Indian Gold Dealers Navigate High Prices and Tax Speculations Amid Demand Fluctuations

Gold dealers in India are facing high prices for the ninth week in a row, so they’re giving discounts to attract buyers. People are cautious about buying because they expect the government might lower taxes on imported gold soon.

India loves gold but right now, prices are around 72,600 rupees per 10 grams, down a bit from May’s record high of 74,442 rupees. Dealers in Kolkata say jewelers are waiting to see what happens with taxes before they buy more gold.

Prime Minister Narendra Modi’s government is scheduled to present the budget in July, adding to the anticipation among market participants. Current discounts offered by Indian dealers stand at up to $11 per ounce over official domestic prices, inclusive of import and sales levies, compared to $9 last week.

Indian Gold Dealers Navigate High Prices and Tax Speculations Amid Demand Fluctuations

Indian Gold Dealers Navigate High Prices and Tax Speculations Amid Demand Fluctuations

The rural sector, typically a significant market, has shown subdued demand as agricultural activities, buoyed by early monsoon rains, have taken precedence.

In China, another major consumer of gold, the market reflects similar tepid sentiments with dealers quoting premiums ranging from $11 to $24 per ounce above international spot prices. This range indicates a cautious approach among retail and wholesale buyers amidst elevated prices. The subdued demand trend is underscored by reports from Hugo Pascal of InProved, noting ongoing weakness in the Chinese gold market.

Conversely, in Singapore and Hong Kong, gold prices have held steady with premiums ranging from par to $3 and par to $2 respectively, reflecting stable but not exceptional demand conditions. Singapore, in particular, has seen a shift in customer interest towards silver bars and coins, partly driven by the comparatively high prices of gold.

Meanwhile, in Japan, bullion prices have been relatively stable with premiums ranging from par to $0.50, signaling a steady but unremarkable market environment. Overall, the global gold market continues to navigate fluctuating prices and varying levels of demand across different regions, influenced by economic factors and expectations of policy changes.

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