MUMBAI/BENGALURU Asian physical gold demand remained subdued this week as the metal rallied to its highest in nearly two years, with discounts in India widening the most in 3-1/2 months as consumers shied away from making new purchases.
The safe-haven bullion has gained about 3 percent this week as the U.S. Federal Reserve remained cautious in its interest rate outlook and high-risk assets, such as stocks, saw heavy losses on concerns about Britain's possible exit from the European Union.
"On the physical side, more clients are calling to sell at the moment because gold is at a high," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.
"In terms of buying, I am sure it will be put on hold except that we expect to see some interest at the moment because of Brexit and some people might think it is a good time to buy."
In India, the world's second-biggest gold consumer, dealers were offering a discount up to $48 an ounce to the global spot benchmark this week, the largest since Feb. 26. Last week dealers were offering a discount of $46.
"Buyers are not even making inquiries. They are postponing purchases expecting a correction in prices," said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.
Gold prices in India have risen nearly a quarter so far in 2016, denting buyers' appetite.
"Jewellers are maintaining thin inventory due to weak retail demand. They will replenish inventory just before the start of the festival season in August," said a Mumbai-based dealer with a private bank.
Two-thirds of India's gold demand comes from rural areas, where jewellery is a traditional store of wealth. Rural demand has been weak since the start of June as farmers were busy with sowing of summer crops, dealers said.
Demand in top-consumer China continued to remain weak with premiums staying flat at $1 per ounce compared with the previous week, while premiums in Singapore stood nearly unchanged from last week at 60-80 cents an ounce.
Prices in Tokyo also remained nearly flat with a discount of 25 cents this week as a strengthening yen could not offer much help as gold prices increased simultaneously, traders said.
Premiums in Hong Kong dipped slightly to range between 30-80 cents, compared with a 50-80 cent premium last week.
(Reporting by Rajendra Jadhav in MUMBAI and Koustav Samanta in BENGALURU; Editing by Sunil Nair)
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Updated Date: Jun 16, 2016 23:36:51 IST