Lower prices revive some demand in top hubs

Physical gold demand in Asia got a fillip this week as consumers snapped up bargains after prices dipped across regions, with premiums in top consumers India and China rebounding to multi-month highs.

Dealers in India were charging premiums of up to $5 an ounce, the highest in five months, over official domestic prices - inclusive of the 10.75% import and 3% sales levies - compared with last week's $1 premiums.

"Retail demand is improving because of price correction. Jewellers are also making purchases for upcoming festivals," said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the city of Kolkata.

On Friday, local gold futures were trading around 46,500 rupees per 10 grams, after falling to a four-month low of 45,662 rupees earlier this week.

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"Jewellers are operating with lower stocks than normal. Their buying could jump if new COVID-19 cases continue to fall in the coming weeks," said a Mumbai-based dealer with a gold importing bank.

In China, premiums rose to their highest since early June at $5-$10 per ounce over global benchmark spot gold prices from the $1-$4 range last week.

"Gold demand in China was a little better when prices dropped; people rushed to buy gold. But now, it's a little quiet," said Ronald Leung, chief dealer for Lee Cheong Gold Dealers in Hong Kong.

Premiums of $0.80-$1.80 were charged in Hong Kong with an uptick in demand led by bargain hunters, while $1.20-$1.50 premiums were quoted in Singapore.

"We saw an increase of more than 60% in demand as compared to last week for both gold and silver. Many wholesalers and jewellers are also buying during this period," said Brian Lan, managing director at dealer GoldSilver Central.

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In Japan, gold was sold on par with global prices, with some demand from investment and retail customers, a Tokyo-based trader said.