Gold's drop to a four-month low this week attracted buyers in Asia but dealers were doubtful the demand would last as consumers may be waiting for the market to go even lower. Spot gold fell to $1,240.69 an ounce on Wednesday, its lowest since early July, on fears the US Federal Reserve could soon begin rolling back its stimulus measures.
The metal has been trading below $1,300 an ounce for nearly two weeks but demand has failed to pick up much as Asian consumers bought a lot at the time of earlier price drops this year. The absence of strong physical buying might put gold prices under even more pressure.
"Demand has picked up but not in a way that we expected. Consumers are waiting for (prices) to go down further and are holding off big purchases," said one Singapore-based dealer.
Premiums over London prices in Hong Kong, Singapore and Tokyo, the top Asian trading hubs, were either stable or saw a very small increase.
In Shanghai, 99.99 percent purity gold was trading at a premium of about $10 an ounce, up from Wednesday's close of $8.
In India, despite muted demand, premiums jumped to $120 an ounce from $80 last week because of a supply crunch caused by government restrictions on imports.
"There is a problem with supply and premiums are very high again at $120, as whatever little was imported has been exhausted," said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation.
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