Gold discounts in India widen as scrap supplies rise

India sees discounts of up to $40/ounce, compared to $35 last week

Discounts on physical gold in India widened as scrap supplies increased amid only a slight improvement in demand, while purchases in top consumer China were steady despite COVID-19 lockdowns as buyers sought safe-haven assets.

Dealers offered a discount of up to $40 an ounce over official domestic prices - inclusive of the 10.75% import and 3% sales levies, up from last week's discount of $35.

The Gudi Padwa festival, also known as Ugadi, was celebrated on the weekend, but jewellers reported lower sales than normal, said a Mumbai-based dealer with a bullion importing bank.

The flow of old jewellery and coins, also known as scrap supplies, jumped because of higher prices, reducing the requirement of imports, the dealer said.

In China, gold prices ranged from a $3 discount to a $2 premium, compared with a discount of $2 to $6 an ounce on global benchmark spot rates in the previous week.

People are still interested in buying gold as a safe-haven because of the Ukraine crisis, said Peter Fung, head of dealing at Wing Fung Precious Metals.

Markets were quiet, yet trading steadily, with COVID-19 restrictions in place across some major cities.