Physical gold demand was tepid in most Asian hubs this week, with premiums in China sliding to their lowest level since at least July 2018, as the coronavirus epidemic bruised businesses in the world's top bullion consumer.
Gold was sold at a premium around $1 an ounce over benchmark prices in China, compared with $2.5-$4.5 an ounce last week.
There has been more than 60,000 confirmed coronavirus cases so far in mainland China, with 121 new deaths reported on Friday.
"I don't see any good business in the market. Most people are at home and working from home. That is why the physical market is quiet," said Peter Fung, head of dealing at Wing Fung Precious Metals.
"For the physical market (to pick up) we have to wait till the coronavirus comes down. Gold imports are expected to drop because shipments are on hold and the physical gold flow from everywhere has stopped already."
In Hong Kong, premiums of $0.30-$0.50 an ounce were charged, little changed from last week's $0.30-$0.80, while premiums in Singapore were unchanged at $0.50-$0.60.
"The raised alert to curb the spread of the coronavirus has reduced visits by walk-in customers," Silver Bullion sales manager Vincent Tie said.
"While the economic fallout from the impact of the coronavirus is still being calculated, we can already project the possible negative impact to the global economy with factories and businesses shut and reduced consumption."
Benchmark spot gold prices were on track for a weekly rise as the coronavirus fears kept demand for safe-haven assets elevated. In India, demand improved due to a jewellery exhibition, although near record high prices capped retail demand. The Gem & Jewellery Export Promotion Council's exhibition, where jewellers display their designs to buyers, kicked off in Mumbai on Thursday. "Jewellers were making purchases due to the exhibition. Retail demand is not picking up due to higher prices," said Mukesh Kothari, director at Mumbai bullion dealer RiddiSiddhi Bullions.
Dealers offered discounts of up to $3 an ounce over official domestic prices this week, down from $6 last week. The domestic price includes a 12.5% import tax and 3% sales tax.
Gold futures were trading around 40,650 rupees per 10 grams on Friday, after hitting a record high of 41,293 rupees last month. In Japan, gold was sold from flat to a premium of $0.50 an ounce, compared with last week's $0.50 an ounce premium to a $0.30 discount range.
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