MUMBAI/BENGALURU (Reuters) - Gold demand in India remained sluggish this week as local prices jumped to their highest level in nearly three months and a rally in global prices of the precious metal dampened fresh buying elsewhere in Asia.
“Demand is still weak. From the next week demand could improve due to festivals,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in Kolkata.
Local gold prices jumped to 28,996 rupees per 10 grams on Thursday, the highest level since June 14.
Dealers in India were offering a discount of up to $7 an ounce on official domestic prices this week, down from a discount of $11 last week, which was the highest since Sept. 24, 2016. The domestic price includes a 10 percent import tax.
“South Korean supplies are landing without import duty. Those supplies are being sold at a discount,” said a Mumbai-based dealer with a private bank.
India’s gold imports will probably drop in the second half of the year from the first six months after jewellers rushed to stock up ahead of new taxes introduced on July 1, the World Gold Council (WGC) said last week.
In top consumer China, premiums were little changed from the previous week at $5 to $6 an ounce. Last week, premiums were in a $4-$7 range.
“There has only been investment buying in the region this week. Physical demand has been very quiet because of the high global prices,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Global gold prices hit their highest in two months on Thursday as the United States and North Korea exchanged more threats, prompting investors to buy bullion as a safe-haven asset. Gold has risen about 1.7 percent so far this week.
Premiums in Hong Kong were 40 cents to 70 cents, slightly lower than last week’s range of 50 cents to 70 cents while premiums in Singapore were unchanged at 60 cents to 80 cents.
In Japan, gold was being sold flat against the benchmark price, as it was last week, mainly due to the ongoing summer holidays, a Tokyo-based trader said.
Higher global prices have also encouraged general public selling, the trader said, adding that demand was expected to pick up once the holidays end in the middle of August.
Additional reporting by Apeksha Nair in Bengaluru; editing by Koustav Samanta and David Clarke