Mumbai: India's demand for gold was muted this week as buyers in the world's top consumer of the metal held off purchases ahead of an expected cut in import duty and a likely drop in local prices. But dealers hope to step up purchases, if the import duty is lowered from a record 10 percent in Saturday's federal budget, to meet demand from the upcoming wedding season and Akshay Tritiya, a major festival associated with gold-buying in April.
"Customers are enquiring but few are buying as everyone is waiting for the duty cut to make big purchases," said Vrishank Jain, at Umedmal Tilokchand Zaveri, at Mumbai's Zaveri bazar. Gold prices in India were either on par with or at a discount of $1 an ounce to the international market this week due to slow demand and adequate supplies, traders said.
"I am just selecting some good jewellery for my daughter's wedding but I will buy next week as prices are likely to drop after the duty cut," said Raziya Khan, a housewife from Mumbai. Demand should therefore pick up from March for the wedding season, which continues until July.
"Imports have been low in the past months because of uncertainty over the duty but now everyone will buy to cater to the jewellery demand," Jain said. However, in the second-biggest consumer China, gold buying remained robust. Premiums on the Shanghai Gold Exchange were at $4-$6 an ounce over the global spot price this week as Chinese buyers returned to the market following the Feb. 18-24 Lunar New Year holiday. Premiums were at $3-$4 before the holiday.
Chinese demand usually weakens after the holiday, but purchases this time have been steady with benchmark spot prices hovering near $1,200 an ounce, a key level for consumers.
