BENGALURU/MUMBAI (Reuters) - A drop in gold prices prompted consumers to buy the precious metal, ahead of festivals in India, the wedding season and China’s long National Day holidays, boosting demand in Asia.
Gold prices have lost nearly 1 percent this week after the Democratic U.S. presidential candidate Hillary Clinton got the better of Republican rival Donald Trump in their first debate, denting the safe-haven appeal of bullion and bonds.
In India, discount over the official domestic prices narrowed to $10 an ounce, from $12 last week, in anticipation of consumer buying during the festival season.
“Retail demand has been improving due to festivals. It is expected to rise further in the coming weeks as we head towards the peak festive season,” said Mukul Sonawala, proprietor of wholesaler and retailer Narrondass Manordass in Mumbai.
Demand for the yellow metal usually strengthens in the final quarter as India, the world’s second-biggest gold consumer, gears up for the wedding season as well as festivals such as Diwali and Dussehra, when buying gold is considered auspicious.
“Jewellers are expecting higher demand in rural areas due to good monsoon. They are stocking up for the festive season,” said a Mumbai-based dealer with a private-bank.
Two-thirds of India’s gold demand comes from rural areas, where jewellery is a traditional store of wealth. This year, India’s food grain production is estimated to rise due to good monsoon.
Premiums in top consumer China stood at $3 an ounce to the spot benchmark.
China’s peak season for gold demand kicks off next week with the National Day holiday, lasting until Lunar New Year early 2017.
“There was some good buying from the Chinese ahead of the holidays, and we need to see if this holds next week,” said Ronald Leung, chief dealer, Lee Cheong Gold Dealers, Hong Kong.
Hong Kong prices were seen at a premium of as much as 70 cents, while premiums in Singapore dipped to 60 cents from last week’s 80 cents, due to lower demand.
Japanese markets witnessed good demand this week as prices in terms of the yen were low, a Tokyo-based trader said. Prices were flat to a discount of 5 cents in Tokyo.
Reporting by Rajendra Jadhav in Mumbai, Nallur Sethuraman in Bengaluru; Editing by Sherry Jacob-Phillips