Demand for gold jewellery and bars subdued in Asian markets

Demand for gold jewellery and bars in top consumer Asia continued to be lacklustre as metal prices were on course for a fifth weekly gain, and bullion dealers said buying will remain sluggish over the course of the summer. Prices in China, the No 1 consumer of gold jewellery, bars and coins, slipped to a discount this week versus the global benchmark that hit a three-month high.
Demand in the second biggest buyer India was also muted, with many waiting for import rules to be eased before making any big purchases. "There is little appetite to buy when prices are seeing an upward momentum," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. "We can expect some pick up in physical demand only after the summer, maybe from September or October," he said. Premiums in Hong Kong, a main trade route into China, were about 50 cents to $1.20 an ounce to global prices, dealers said. A very few were even selling at a small discount or on par to global prices. In China, local prices were at a discount of about $1 an ounce. Last week, prices were on par with London prices.
Thailand prices were also at a discount, while Singapore premiums continued to range between 80 cents and $1.20. "Even with a price drop, I doubt demand is going to increase much," said a dealer in Singapore. Asia bought a record amount of gold last year as prices fell 28 percent after a 12-year bull run. Consumers brought forward their purchases when prices were lower, eating away some of this year's demand.
In India, consumers were waiting for the government to present its budget next week, with many in the market expecting a cut in the record high import duty of 10 percent on gold. Struggling with a ballooning trade deficit, India last year hiked its import duty on gold and made it necessary for a fifth of all imports to be exported. The moves resulted in lower imports, scarcity of the metal and higher domestic prices. An easing of import rules would further push down domestic prices that are currently $25-$30 per ounce above London prices - the weakest since February, dealers said. Premiums had climbed to over $100 last year.