MUMBAI/BENGALURU Gold demand in Asia was muted this week as physical buyers stayed off the market due to the bullion's recent rally, with a key festival in India failing to lift demand in the world's second biggest consumer.
Gold has gained about 20 percent this year, touching a 15-month high earlier in May. Though prices slipped from those highs this week, consumers shied away from making big purchases, and premiums in key markets remained low.
Indians bought a third less gold than last year during the annual Hindu and Jain holy festival of Akshaya Tritiya this week, when it is considered auspicious to buy gold.
"This week's demand was better than last week as consumers were making purchases for Akshaya Tritiya. Year-on-year basis demand was much lower during the festival due to higher prices," said Aditya Pethe, a director at Waman Hari Pethe Jewellers.
Demand in India was also hurt by droughts that have hit the earnings of millions of farmers. Rural demand accounts for about two-thirds of India's total gold consumption.
Dealers were offering discounts of up to $15 an ounce to the global spot benchmark this week, up from a discount of up to $12 in the previous week.
"Jewellers have slowed down purchases. Retail demand is not picking momentum despite various promotional schemes launched by them," said a Mumbai-based bullion dealer with a private bank.
India's gold demand in the first quarter slumped 39 percent from a year ago due to a rally in gold prices, jewellers' strike and as consumers had delayed purchases hoping a cut in India's 10 percent import duty on gold in the national budget, the World Gold Council said earlier this week.
Physical demand in other major trading centres also remained tepid.
Premiums in Singapore were quoted at 60-80 cents an ounce, lower than the usual of $1-$1.20, while those in Hong Kong ranged from 10 to 60 cents. Prices in Tokyo were at a discount of $1 to $2 an ounce.
"Physical demand is not exceptional at the moment," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.
"The refineries in the region are having a lot of gold scrap. They are buying more than they are selling. That is the reason why there are lower premiums over here," Lan said.
In top consumer China, premiums ranged between $1 and $1.50, largely unchanged from last week.
Traders said a sub-$1,250 price level will be required to bring buyers back into the market. Prices are currently trading near $1,270 an ounce.
(Reporting by Koustav Samanta and Vijaykumar Vedala in Bengaluru, Rajendra Jadhav in Mumbai; Editing by A. Ananthalakshmi and Sherry Jacob-Phillips)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.
Updated Date: May 13, 2016 23:45:13 IST