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By
Reuters
Published
Oct 13, 2009
Reading time
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Jewellers sell gold scrap, Indian buying persists

By
Reuters
Published
Oct 13, 2009

By Lewa Pardomuan and Ruchira Singh

SINGAPORE/MUMBAI (Reuters) - More gold scrap entered the physical market on Tuesday 13 October as bullion hovered near all-time highs, while last-minute purchases by Indian consumers ahead of religious festivals kept premiums steady in Asia.



Jewellers in Indonesia and Thailand were still cashing in on gold's rise to a record above $1,060 an ounce, but dealers in Singapore said there was buying interest from India before Dhanteras and the Hindu festival of lights of Diwali later this week.

Gold was slightly higher at $1,056.75, within sight of a record of $1,061.20 set on Oct. 8. Bullion has gained as much as 21 percent this year on fund buying driven by uncertainties in the dollar's outlook. However, the high price may take a toll on jewellers.

"Compared to last year, my sales in tonnage terms is down by 35-40 percent," said Chanda Venkatesh, proprietor of Chanda Anjaiah Parameshwar, a wholesaler in Hyderabad.

"It is as if international sellers are taking prices up to cash in on India's Dhanteras demand. I'll bet prices will fall by $100 after the festival," he added.

Indian retailers expect more sales before Dhanteras on Thursday 15 October, when Hindus buy precious metals with the belief it will make them prosperous. Diwali, which falls on Saturday 17 October, marks the peak of the festive season which started in August.

Weddings take place during the festive season and jewellery forms an essential part of the dowry basket in the world's largest gold consumer. But dealers expected imports to fall as much as 35 percent this year due to high prices.

"India buys on dips, so I really hope the price will fall. It's still too expensive for them," said a physical dealer in Singapore, who sells bullion to India.

"Thai consumers are still dishoarding. There are scraps from Indonesia but I think they also want to hold on to their stocks for future sales in the local market," he said.

Premiums for gold bars were steady at 60 to 70 U.S. cents an ounce to the spot London price in Singapore.

Indian dealers quoted premiums for gold bars at between 70 cents and $1 an ounce to the spot London price, depending on the quality. That was unchanged from last week.

Selling by retail investors persisted in Tokyo, which further widened the discount for gold bars to $1 an ounce, a level last seen in June. "The scale of the sale is bigger compared with a few weeks ago," said a physical dealer in Tokyo.

In Hong Kong, a centre for bullion trading in East Asia, premiums were barely changed at 30 to 40 cents, as speculators waited for more gains in price before they cashed in.

"There's not much buying and selling. We are still watching for the U.S. dollar, whether or not it will continue weakening," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. "The media is still talking about a higher gold price, so people are reluctant to sell gold," he said, adding that another failure to break through last week's record above $1,060 could lead to a technical correction.

The dollar drifted against a basket of currencies on Tuesday 13 October but stayed soft against the Australian dollar, which earlier hit a 14-month high boosted by optimism that robust U.S. corporate earnings would sustain investors' risk appetite.

(Editing by Lincoln Feast)

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