Some buyers return to market as China eases COVID curbs

Gold premiums in China rose this week as demand picked up after the top consumer eased COVID restrictions, while high prices muted activity in India.

Premiums in China (XAU-CN-PREM) rose to $10-$25 an ounce over benchmark spot prices GOLD from last week's $2-$12.

"Despite fresh demand, volumes were low as spot prices were around $1,800. However, demand will pick up further as Chinese New Year approaches," said Peter Fung, head of dealing at Wing Fung Precious Metals.

The People's Bank of China controls the amount of gold entering the country via quotas to commercial banks.

There was good buying interest on news of easing curbs although volume was relatively low, said Bernard Sin, regional director, Greater China at MKS PAMP.

China's central bank reported on Wednesday it added 32 tonnes of gold to its reserves, the first time it disclosed an increase since September 2019.

In India, local gold prices (MAUc1) jumped to a 9-month high of 54,348 rupees per 10 grams this week, crimping demand and in turn forcing dealers to offer discounts for a fifth consecutive week.

"Jewellers have nearly stopped purchases as retail buying has gone down," said Mukesh Kothari, director at dealer RiddiSiddhi Bullions in Mumbai.

"Demand would remain subdued in the short term unless we see a correction of around 1000 rupees."

Dealers offered discounts (XAU-IN-PREM) of up to $20 an ounce over official domestic prices — inclusive of 15% import and 3% sales levies — versus last week's $18 discounts.

Wedding season is underway, but demand is not getting any traction, said a Mumbai-based bullion dealer with a private gold importing Bank.

In Hong Kong, gold changed hands between a discount of $0.5 and $2.50 premiums (XAU-HK-PREM), while Singapore dealer charged $1.50-$3.00 premiums (XAU-SG-PREM).

In Japan, bullion was sold anywhere between at par to spot prices to a $0.50 premium (XAU-SG-PREM).