Demand for physical gold in Asia could pick up in the coming weeks as India`s festival season drives interest in the metal, after high prices kept buyers at bay again this week.
Gold`s `safe haven` appeal has prevented a steep drop in buying across Asia amid tensions over North Korea, but dealers in India, the second biggest consumer of gold, were offering discounts of up to $8 an ounce this week, $2 wider than last.
"Supplies are sufficient but demand is very weak. Prices need to come down to attract buyers," said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.
Local prices jumped to 30,474 per 10 grams on Friday, the highest level in 10 months. The domestic price includes a 10 percent import tax.
"In the last few weeks, demand has been weak, but still, trading houses aggressively imported gold. As prices have moved up, importers can sell at (a) discount," said a Mumbai-based dealer with a private bank.
India`s gold imports in August nearly tripled from a year ago as a recent tax change that allowed importers to ship it from South Korea without paying customs duty saw some traders purchasing heavily from the country.
The observance of `Shradh`, considered an inauspicious period when Indians pay homage to their ancestors, was also weighing on demand, said another Mumbai-based dealer.
Demand will get a boost from the upcoming festival season, with Dusshera in late September and buying is likely to peak during Diwali and Dhanteras next month, the dealer added.
In top consumer China, premiums were being offered in the $3-$5 range, the same as last week.
"Demand has been fairly steady in China this week, but it would probably start to pick up starting next week ahead of a national holiday," a Hong Kong-based dealer said.
In Hong Kong, premiums were between 30 and 60 cents over benchmark rates, little changed from the 30 to 70 cents range in the previous week.
Benchmark spot gold hit an over one-year high at $1357.54 an ounce on Friday on geopolitical tensions. [GOL/]
In Singapore, unlike elsewhere in Asia, premiums increased to about 80 cents this week, up from a 30-60 cents range last week.
"People are buying and so are businesses. There`s also safe haven buying," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
"If gold pulls back, we`ll see more buying because people are worried about what`s going to happen in terms of political tensions from North Korea."
Gold in Japan was being sold with discounts of up to $1 over the benchmark rates, unchanged from the previous week, a Tokyo-based trader said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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