Physical gold demand in Asia stayed soft this week, with premiums in top hub China easing further as fresh COVID-19 restrictions dimmed activity while higher domestic prices put off most buyers in India.
Premiums in China eased to $10-15 an ounce over benchmark spot prices from last week's $8-$25.
"Although seasonal demand is quite strong globally, the recent uptick in market prices coupled with renewed COVID lockdowns in China have dampened domestic demand," said independent analyst Ross Norman.
The premiums had been spiking since September, reaching as high as $45 at one point, but have eased this month. China's central bank controls how much gold enters the country via quotas to commercial banks.
Bernard Sin, regional director, Greater China at MKS PAMP said that "just when the market got excited with re-opening, PBOC drained liquidity and warned on rising inflationary pressure while gold market saw a flush out last week," adding demand could slowly creep in again into year-end.
Meanwhile in India, dealers offered discounts of up to $21 an ounce over official domestic prices — inclusive of 15% import and 3% sales levies — compared with last week's $26 discounts.
"Instead of buying, few people are selling old jewellery. The price rise has stalled buying momentum gained during the festive season," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
Local gold prices jumped to 53,200 rupees per 10 grams last week, the highest since April 19.
Bullion dealers and banks were trying to clear lower priced stocks by offering hefty discounts, said a Mumbai-based bullion dealer with a private bank.
Higher prices dented activity in Hong Kong as well, with gold priced between on par with the benchmark prices to $2.50 premiums.
"Don't see any special interest in the physical market unless prices come down and COVID restrictions ease, allowing people to travel," said Peter Fung, head of dealing at Wing Fung Precious Metals.
Singapore dealers charged $1.50-$3.00 premiums. (Reporting by Arundhati Sarkar and Kavya Guduru in Bengaluru, Rajendra Jhadav in Mumbai Editing by Tomasz Janowski)