Asia Gold-Record prices dull India demand ahead of key festival
Indians will celebrate Diwali in late October
Ongoing price rally is slowing down the demand - Indian trader
China discounts between $3-$14 this week
By Rajendra Jadhav and Daksh Grover
Oct 18 (Reuters) -Physical gold dealers in India were forced to offer discounts this week, as record high prices dampened demand ahead of a key festival, while discounts in top consumer China narrowed.
In India domestic prices MAUc1 hit a record high of 77,641 rupees ($923.85) per 10 grams, up more than 15% from a four-month low of 67,400 rupees hit in July.
"The ongoing price rally is slowing down the demand. Consumers are buying less volume because they need to allocate far more money if they want to buy the same volume they planned with the rising prices," said Bachhraj Bamalwa, partner at Indian jewellery retailer Nemichand Bamalwa & Sons.
Indian dealers offered a discount XAU-IN-PREM of up to $8 an ounce over official domestic prices, – inclusive of 6% import and 3% sales levies, versus last week's $3 premium.
"Jewellers aren't feeling too confident about Diwali sales this year due to rising gold prices. To keep customers interested, many are offering discounts on jewellery making charges to help boost their sales during the festive season," a Mumbai-based bullion dealer with a private bank said.
Indians will celebrate Diwali in late October, when buying gold is consider auspicious.
Chinese dealers narrowed discounts to $3-$14 below international spot prices XAU=, from $15-$31 discounts quoted last week. In Hong Kong, gold was sold between $2 discount and $1.20 premium XAU-HK-PREM.
Recently, China has sharply ramped up policy stimulus, but markets are waiting for a clearer road map on economic recovery.
Retail gold demand in China has taken a hit this year amid sky-high prices and economic slowdown.
Chinese demand unlikely to recover in the next three months as prices will rise further, said Peter Fung, head of dealing at Wing Fung Precious Metals, Hong Kong.
Hong Kong leader John Lee on Wednesday pledged to promote the development of world-class gold storage facilities in the region.
In Singapore, gold was sold between discount $0.80 to $2.20 premium XAU-SG-PREM.
($1 = 84.0410 Indian rupees)
Reporting by Daksh Grover and Ashitha Shivaprasad in Bengaluru and Rajendra Jadhav in Mumbai; Editing by Rashmi Aich
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