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MUMBAI: Chinese gold dealers were forced to offer the steepest-ever discounts this week as physical demand plunged, while the Indian market flipped to a premium again.

Discounts of $42-$88 per ounce were offered versus global benchmark rates in top consumer China, against last week's $20-$37 range.

International spot prices hit a new record of $1,980.57 on Tuesday on surging safe-haven investments due to the coronavirus outbreak.

"This means the Chinese think the international price is too high, no one's bidding and the sellers keep selling," said Samson Li, a Hong Kong-based analyst at Refinitiv GFMS.

The Chinese market has been in discount since February.

Indian consumption could plunge to a 26-year low in 2020, the World Gold Council said.

Indian dealers charged premiums of about $8 an ounce over official domestic prices, inclusive of 12.5% import and 3% sales taxes, versus last week's $6 discount, but retail demand remained weak.

"Physical supplies are tight. Marginal improvement in investment demand pushed prices to a premium," said Mukesh Kothari, director at Mumbai-based dealer RiddiSiddhi Bullions.

India's gold imports plunged 96% year-on-year in the June quarter to 13 tonnes.

Dealers expect the government to substantially raise the base import price, set every fortnight, for the first half of August, considering the global rally, Kothari said.

Local gold futures hit a record 53,844 rupees per 10 grams on Friday.

Hong Kong prices fluctuated between a $0.50 discount to a $1.50 premium.

"Many clients in Hong Kong buy over the counter and take possession of the goods while in Singapore," said Zvika Rotbart, South East Asia business development executive at J. Rotbart & Co.

Singapore premiums were unchanged at $0.8-$1.50.

Silver demand has "exploded," said Vincent Tie, sales manager at dealer Silver Bullion.