MUMBAI/BENGALURU (Reuters) - Higher prices kept demand for gold subdued in Asia this week while recent import restrictions in India prompted dealers to cut down on hefty discounts that were being offered over the past couple of weeks.
In India, fresh purchases were limited as local prices jumped to as high as 29,937 per 10 grams earlier this week, the highest level in nearly 10 months.
“People are struggling to digest the sudden price rise. Buyers are on the sidelines, expecting a correction in prices,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city Kolkata.
Dealers were offering a discount of up to $6 an ounce this week on official domestic prices, down from $10 last week. The domestic price includes a 10 percent import tax.
Discounts narrowed after a restriction was imposed last week on imports from South Korea. However, traders said the market could swing into a premium over the next few weeks.
The import restrictions were put in place as traders were taking advantage of a recent tax change that enabled them to ship in gold without paying the customs duty.
“Banks and refiners are slowly importing. They have not been able to sell in the market at hefty discounts,” said a Mumbai-based dealer with a private bank.
Benchmark spot gold was on track for a weekly gain of over 2 percent, with prices having touched a 9-1/2 month peak on Tuesday amid safe haven demand buoyed by political tensions stemming from North Korea.
“It’s been a very quiet week. It takes time for people to adjust to prices above $1,300 an ounce level,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
In top consumer China, premiums were being offered in the $3-$5 range this week, little changed from last week’s $2-$5. In Hong Kong, premiums were quoted between 30 and 70 cents over benchmark rates, down from $1-$1.50 in the previous week.
“If prices go back to $1,250, some demand will appear for sure,” a Hong Kong-based gold refiner said.
In Japan, gold was being sold at a discount of up to $1. Last week, local prices were between flat and a 25 cent discount.
Premiums in Singapore were between 30 and 60 cents, unchanged from the previous week.
Reporting by Arpan Varghese in Bengaluru; Editing by Koustav Samanta and Vyas Mohan