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Published
Apr 15, 2010
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Higher gold price scares off Indian buyers; premiums flat

By
Reuters
Published
Apr 15, 2010

By Lewa Pardomuan

SINGAPORE (Reuters) - Jewellers in India, the world's largest gold consumer, turned their back on gold as prices held near a four-month high, while selling from holders in other parts of Asia kept premiums under pressure.



Gold bars were quoted 70 to 80 U.S. cents an ounce above the spot London prices in Singapore, unchanged from last week, due to the absence of inquiries from jewellers.

Gold added $1.40 to $1,155.30 an ounce, within sight of Monday 12 April's peak of $1,168.70. Bullion is about 6 percent below a record high above $1,226 struck in early December.

Dealers noted steady demand from India last week, whenever gold slipped below $1,150 an ounce.

"Physical markets have slowed due to the high volatility in prices and in India, the demand has been curtailed by a lack of any major festivals as well as rising international prices," said Pradeep Unni, senior analyst at Richcomm Global Services in Dubai.

"A stronger rupee helps offset the recent rise in prices, but the demand is lower in comparison to the same period last month," he added. The wedding season is underway in India but major festivals, such as Akshaya Tritiya next month, also boost consumption. Gold jewellery is the most common gift during religious events in India, which accounts for 20 percent of global demand for gold.

"Indonesia is eager to sell at high prices and we don't see much buying from India either," said a physical dealer in Singapore.

"There's a chance for gold to move higher and I think it may try to break the $1,140 to $1,170 range. But if the price is not attractive, then buying power wouldn't be there," said the dealer, adding that demand from Thailand also slowed down due to holidays.

Consumers had bought gold on a price dip, especially during March when bullion slipped below $1,100 several times.

India's March gold imports jumped nearly six times from a year ago as pent-up demand and steady prices since January revived purchases, according to the Bombay Bullion Association.

In Hong Kong, a centre for bullion trading in East Asia, dealers saw bargain hunting but buying interest from jewellers was limited due to rising prices.

Premiums barely changed at 80 cents to $1 to the spot London prices, while in Tokyo, gold bars remained at a discount of 50 to 75 cents.

"We continuosly see liquidation by the general public but I guess the selling will only pick up if we see another peak in gold prices," said a dealer in Tokyo.

"Maybe Japanese trading houses can make some money by exporting gold bars to the parts of Asia, where the bars are being sold at premiums," he added.

(Editing by Himani Sarkar)

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