Gold's Dealer Discounts At 5-Month High As Dip In Prices Fail To Attract Buyers

Dealers in India are offering the highest discounts on gold in 5 months this week after a dip in domestic prices failed to revive demand, a Reuters report said. It also added that in China, the top consumer of the metal in the world, prices remained at a sharp discount to the international market.

In India, according to the report, discounts are being offered at $45 an ounce are being offered over the official domestic prices, the highest since the last week of March, when compared with $20 last week. These domestic prices include 12.5 percent import and 3 percent sales taxes.

Discounts in China eased to $60-$70 an ounce from last week's $80-70, against international spot gold rates, which traded in a $1,902.22-$1,976.03 range. Chinese discounts hit a record $75-$100 earlier in August.

On Friday, gold futures on MCX (Multi Commodity Exchange of India) closed at Rs 51,448 per 10 grams this week, a significant correction seen from the Rs 56,191 high seen earlier in August.

"When prices were rising, at least investors were making purchases anticipating a further rise. As prices are now correcting due to a strong rupee, they're taking a pause," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji to Reuters.

A Mumbai-based dealer with a bullion importing bank attributed the higher discounts to rising scrap supplies amid low demand.