Physical gold demand in key Asian hubs was subdued this week, as rising prices dampened sentiment, prompting dealers in top consumer China and India to offer steep discounts to attract buyers.
Indian dealers offered discounts of up to $15 an ounce over official domestic prices this week, which include a 6% import and 3% sales tax, up from a discount of up to $10 last week.
“Buyers are struggling to understand the broader trend. Prices were rallying at the beginning of the week but suddenly corrected mid-week,” said a Chennai-based jeweller.
Domestic gold prices were trading around 98,500 rupees per 10 grams on Friday after rising to 100,555 rupees earlier this week.
Jewellers were reluctant to purchase gold at current prices or even place orders for jewellery production, as retail demand has remained negligible for more than a month, said a Mumbai-based bullion dealer at a private bank.
In China, dealers offered gold between a discount of $5 and a premium of $4 per ounce above international rates.
“The physical demand is quite low because prices rose above $3,400. Price are too high, we are seeing some liquidation, selling interest. People are hesitant to buy at the moment,” said Peter Fung, head of dealing at Wing Fung Precious Metals.
China’s imports of gold extended declines for a second successive month in June, customs data showed on Sunday.
In Hong Kong, gold was sold at par to a premium of $1.50, while in Singapore gold traded between at-par prices and a $2.50 premium.
“We’ve seen some clients who came to purchase, reason being they’re worried that the prices will continue to shoot further up. But I think more of a selling at this point of time,” said Brian Lan, managing director at Singapore-based GoldSilver Central.
In Japan, bullion was sold at a discount of $0.50 to a $0.70 premium over spot prices.
(By Brijesh Patel, Polina Devitt and Rajendra Jadhav; Editing by Sherry Jacob-Phillips)