Buyers in major Asian hubs put off physical gold purchases this week due to a rally in prices on escalating Russia-Ukraine tensions, pushing Indian dealers to offer the highest discounts in nearly seven months.
"Consumers are struggling to adjust with sudden price rise," said a Mumbai-based bullion dealer with a private gold importing bank.
Local gold prices jumped to 50,438 rupees per 10 grams on Thursday, the highest level since January 2021.
This week, dealers were offering a discount of up to $5.5 an ounce on official domestic prices - inclusive of the 10.75% import and 3% sales levies, up from the last week's discount of $2.5.
Jewellers have nearly stopped making purchases as they are anticipating prices will fall once tensions are eased between Russia and Ukraine, said a bullion dealer based in Chennai in the southern state of Tamil Nadu.
Swiss exports of gold to India fell in January, while shipments of bullion to mainland China surged to their highest since December 2016, Swiss customs data showed on Thursday.
In top consumer China, premiums widened slightly to about $2-$6 an ounce over benchmark spot gold rates, while Hong Kong saw premiums steady at $0.50-$2.00.
The physical gold market is "a bit quiet this week" due to high prices, and given the COVID situation in Hong Kong, customers are in wait-and-see mode, said Dick Poon, general manager at Heraeus Metals Hong Kong Ltd.
In Singapore, premiums of $1.50 to $2.00 per ounce were charged this week, compared with last week's $1.80- $2.50.
"Demand has waned a little. We've seen more profit-taking during this period, mainly from wholesalers and jewellers," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
Gold prices at multi-month highs have also probably led to some retail selling, Lan added. In Tokyo, gold was sold in a range at par with spot prices and a $0.75 premium.