Physical gold buying in India was lacklustre this week as a correction in local prices failed to attract consumers, while demand picked up in China and Hong Kong ahead of Lunar New Year festivities.

Local gold prices were hovering around 62,000 rupees per 10 grams on Friday, after hitting a one-month low of 61,454 rupees earlier this week. Prices had hit a record high of 64,460 rupees last month.

“Even though prices have decreased, buyers are still hesitant, waiting for additional price corrections. The demand remains sluggish due to the price volatility,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Dealers were offering a discount of up to $9 an ounce over official domestic prices, inclusive of the 15% import and 3% sales levies, down from the last week’s discount of $13.

Asia gold: Falling prices spur Indian demand, China premiums rise

Indian retail demand has been weak for almost a month, making jewellers cautious during the ongoing wedding season and prompting them to go slow on inventory buildup, said a Mumbai-based dealer with a private bullion-importing bank.

In top consumer China, premiums were at $42-$54.2 per ounce over spot prices, compared to last week’s $45-$51 range. Hong Kong dealers charged premiums of $2-$4 per ounce.

The Chinese New Year, a key occasion to buy gold, starts on Feb. 10.

This year being “Year of the Dragon has added fuel to the fire for jewellery demand as this is seen as a traditionally auspicious year for gold purchases in China, second only to the Year of the Rabbit,” independent analyst Ross Norman said.

“Despite a faltering economic recovery in China or perhaps because of it, Chinese investors are doubling down on this safety asset.”

In Singapore, dealers charged premiums between $1.5-$3 and in Japan dealers sold gold at on par to a $1 premium.

Vincent Tie, sales manager at Singapore dealer Silver Bullion said demand has waned slightly, perhaps due to investors cautiously observing if they can get a better price if the gold price dips under $2,000.

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