MUMBAI/BENGALURU (Reuters) - Gold demand was sluggish this week in major centres across Asia as prices stayed high, prompting buyers to stay on the sidelines.
Spot gold prices were mostly unchanged around the $1,287 an ounce as of 0840 GMT on Friday, and were on track for a small weekly gain.
“Demand has been slower this week across Asia because prices haven’t moved much,” a Singapore-based dealer said, adding that a drop to the $1,220-$1,250 level could spur buying.
In top consumer China, demand was weak with premiums being offered in a $2-$5 range, compared with the $3-$4 level last week, traders said.
“Over the first half of 2017, people have been gravitating more toward investments such as base metals rather than gold since there hasn’t been a drastic movement in gold prices when compared to other investments,” a Shanghai-based trader said.
In Hong Kong, however, gold was being sold at a premium of $1-$1.50 to the international benchmark, up from the 30-70 cents range previously.
China’s net gold imports via main conduit Hong Kong increased 2.3 percent in July from the previous month.
In the second biggest consumer, India, dealers offered discounts of up to $10 an ounce this week, down from the $13 discount last week, which was the highest in 11-months.
“For the last few weeks, demand has been weak. Buyers are not ready to make purchases above 29,000 rupees. They are waiting for a price correction,” said Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai.
This week, local gold prices were trading near their highest in over two months.
“Still, gold has been trading at a discount due to rising supplies from South Korea. It has become difficult for banks and refiners to do business,” Kothari said.
Price in India includes a 10 percent import tax, but this does not apply to countries with which it has signed Free Trade Agreements (FTAs), such as South Korea.
Indian traders are likely to import 25 tonnes of gold from South Korea in July and August.
“As we move closer to the festive season, discounts will disappear and the market will start trading in premium, possibly from next month,” said Jayant Pawania, group executive vice president at Yes Bank.
Meanwhile, premiums in Singapore were lower at 30-60 cents this week, as against the 60-80 cents range last week.
In Japan, gold was being sold between flat and a 25 cent discount.
Reporting by Rajendra Jadhav in Mumbai, Apeksha Nair and Arpan Varghese in Bengaluru; Editing by Vyas Mohan