Gold demand in Asia was low last week with investors delaying fresh purchases anticipating a further drop in local prices as the global spot market was pressured by expectations of a hike in interest rates by the U.S. Federal Reserve.
Spot gold was on track for its first weekly decline in five, its worst since November, on growing expectations of a U.S. rate hike as early as this month.
Gold discounts in India, the world’s second-largest consumer of the metal, expanded this week to their widest in two months.
In the local market gold futures were trading around 29,125 Indian rupees per 10 grams on Friday. Before starting to fall back, the prices had risen as much as nearly 9 percent from 26,862 rupees per 10 grams in December, the lowest level since February 2, 2016.
Dealers in India were offering a discount of up to $3 an ounce this week from official domestic prices, the widest it has been since the last week of December.
Last week, dealers were charging a premium of $1 an ounce. The domestic price in India includes a 10 percent import tax.
“Wedding season demand has been moderating. It will revive again in April,” said a Mumbai-based dealer with a private bank.
Meanwhile, India’s February gold imports surged to 50 tonnes, up 82 percent from a year ago, on pent-up jeweller demand and as retail consumers ramped up purchases for weddings, provisional data from consultancy GFMS showed.
In top consumer China, physical demand for gold has been stable, traders said, with premiums being quoted between $9-$12 an ounce over international spot prices, compared to the $7-$8 levels seen last week, Reuters reports.
Premiums in Hong Kong were around 50 cents to $1.10, compared to the 90 cents to $1 levels last week. Prices in Japan were at a discount of 50 cents to $1, unchanged from a week ago.