BENGALURU/MUMBAI (Reuters) - Asia gold demand ticked up this week as global prices came off seven-month highs, while Indian buyers stayed on the sidelines waiting for further price drops in the absence of fresh triggers to stoke purchases.
“Demand has picked up in Asia compared to last week. There were some purchases especially in the latter half of the week after the U.S. Federal Reserve policy meeting when gold prices fell,” a physical dealer with a Singapore-based bank said.
Spot gold has fallen more than 3 percent from a seven-month peak of $1,295.97 hit on June 6.
Physical gold buying has also been supported due to the bullion’s appeal as a safe haven asset amid political uncertainty in the UK and the United States and ahead of upcoming elections in Germany and Italy, said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore.
Demand in top consumer China increased marginally, with premiums rising to $8-$10 per ounce this week, against $4-$6 per ounce the week before.
“There has been some improvement in demand with prices coming off the highs of $1,290s,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
In India, gold demand has fallen as the wedding season is nearly over and farmers are busy in the sowing of summer-sown crops.
“The market is still trading in discount. Retail demand is weak,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler based in Kolkata.
Dealers in India were offering a discount of up to $3.00 an ounce this week over official domestic prices, slightly lower than the $3.50 discount offered last week, the widest in more than five months. Domestic gold prices include a 10 percent import tax.
Demand also remained subdued as buyers were waiting for gold prices to drop further.
“Inventory level is pretty high with jewellers and dealers. Market will trade in discount for the next few weeks, unless demand improves,” said a Mumbai-based dealer with a private bank.
India’s gold imports in May surged four-fold from a year ago to 103 tonnes as jewellers increased purchases to replenish inventory and stock up ahead of a new national sales tax, provisional data from consultancy GFMS showed.
In Singapore, gold was selling at a premium of $1.00, unchanged from the previous week, while Hong Kong premiums ranged between 50 cents and $1.00, compared with 40 cents to $1.00 an ounce last week, traders said.
Prices in Tokyo were at a 50-cent premium against a discount of between 25 cents and 50 cents last week.
Additional reporting by Nithin Prasad in Bengaluru; Editing by Biju Dwarakanath