Gold discount shrinks to 5-month low

Gold demand seems to be picking up as prices have started moderating. This is reflected in the falling discount to the cost of import, now at a five-month low of $4.5 per ounce. Three months earlier, the discount in official trade was as high as $45; in the cash or unofficial gold market, it was around $100 an oz.

Shekhar Bhandari, senior executive vice-president for the segment at Kotak Mahindra Bank, said: “With the sharp fall in price and festive demand starting, gold imports have improved. Increased supplies also helped in reducing the discounts. Going forward, the trend in demand improving is expected to continue.”

  When people have money in their hands, he said, they spend. As was seen from the successful e-commerce business over recent days.  Demand is picking up as the festive season has begun, the monsoon has revived rural demand and prices have moderated. Importers, especially banks, were not interested in importing in a high discount scenario. Refining was also unviable.

On Thursday at Zaveri Bazar here, standard gold closed at Rs 30,020 per 10g, about Rs 45 higher than Wednesday. Silver closed Rs 90 higher at Rs 43,195 a kg. In the global market, gold fell from $1,350 an oz a fortnight earlier to $1,264 an oz, as investors booked profits.