MUMBAI/BENGALURU (Reuters) - Gold demand in Asia rose this week as a dip in bullion prices enticed buyers to make new purchases, with the metal being sold at a higher premium in top consumer China.
The international benchmark spot gold plunged to an eight-week low of $1,213.81 an ounce earlier this week.
In India, the second-largest consumer of the metal, gold futures were trading around 28,000 rupees per 10 grams on Friday, down 4 percent in nearly four weeks.
“Demand has been good in the last few weeks. Consumers are comfortable at the current price level,” said Kumar Jain, vice president, Mumbai Jewellers Association.
Dealers in India were charging a premium of up to $1 an ounce this week over official domestic prices, compared with a premium of $2 last week. The domestic price includes a 10 percent import tax.
India’s gold imports in April more than doubled from a year ago to 75 tonnes on strong demand during a festival that prompts purchases.
“Jewellers are building inventory as sales were good during Akshaya Trititya. Wedding season demand is also better than last year,” said a Mumbai-based banker with a private bank.
Indians celebrated the annual festival of Akshaya Tritiya, when buying gold is considered auspicious, in the last week of April.
In the first quarter of this year, Indian gold demand rose 15 percent from a year ago, the World Gold Council said in a report published earlier this month.
In China, premiums rose up to $15 an ounce over the international benchmark, from $12 last week. Premiums in Hong Kong were quoted at around 60 to 90 cents.
“There is good amount of buying interest at these price levels in China,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
In Singapore, gold premiums remained in a 70 cents to $1 range, unchanged from last week, while prices in Tokyo were at a discount of 50 cents, compared with a 25-cent discount last week.
“People are waiting for (U.S.) interest rates to go up and prices to come down further,” Leung added.
Recent federal data suggests a tightening labour market and rising inflation have strengthened the case for another interest rate hike by the U.S. central bank in June.
Higher interest rates tend to increase the opportunity cost of holding non-yielding gold. At present, the market sees close to a 90 percent chance of a hike in U.S. interest rates next month.
Additional reporting by Nallur Sethuraman in Bengaluru; editing by Susan Thomas