MUMBAI/BENGALURU Gold discounts in India soared to a record high this week as prices in the world's second-largest consumer of the commodity touched a near three-year high, hurting consumer demand for physical gold.
Buying elsewhere in Asia also remained subdued as the global spot benchmark rallied after Britain's surprise vote to leave the European Union last month.
Bullion gained nearly 9 percent due to the political and economic concerns arising since the Brexit vote. Gold prices touched their highest in over two years earlier this week.
Dealers in India were offering a discount of up to $100 per ounce to the global spot benchmark XAU=, up from last week's $57.
Gold prices MAUc1 in the country hit a peak of 32,455 rupees ($481.81) per 10 grams earlier this week, the highest level since September 2013.
"At this level no one wants to buy. Everyone is waiting for a correction," said Bachhraj Bamalwa, director at All India Gems and Jewellery Trade Federation.
"Buyers think this price level will not sustain. Dealers are offering nearly $100 discount, but still they couldn't do much business."
Buying in rural areas, which account for about two-thirds of India's gold demand, continued to remain weak since the arrival of the summer crop sowing season, dealers said.
"Despite a price rally investment demand is weak. People are not interested in gold since the (Indian) stock market is also moving higher," said a Mumbai-based dealer with a bullion importing bank.
Physical gold demand remained weak in top consumer China, with consumers staying away due to high prices, traders said.
Prices in China were seen at a discount of $1-$2 per ounce, unchanged from last week.
In Japan, consumers were opting to sell gold rather than buying, to cash in on the higher prices, a Tokyo-based trader said.
"We have observed a buy-sell ratio of 1:3," the trader said.
A discount of 50 cents to $1 was being offered in Japan.
Among other major trading centres in Asia, premiums in Singapore were seen unchanged from last week at 60 cents, though slightly improved activity was witnessed this week.
"We have seen more activity in the physical market this week. People have started to realize that Brexit is real and the financial markets and some currencies are weakening quite sharply," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.
Hong Kong prices were at a discount of $1 this week, versus $1-$2 discount the week before.
($1 = 67.3600 Indian rupees)
(Additional reporting by N Sethuraman and Koustav Samanta in Bengaluru)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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Updated Date: Jul 08, 2016 22:15:08 IST