Premiums on physical gold in China hit a near five-month peak this week on strong retail demand in the top consumer, while a weaker rupee offset the impact of a retreat in local prices in India.

Chinese dealers charged premiums of $20-$35 an ounce over global spot prices, versus $15-$22 last week.

“We’re moving towards the peak season for Chinese buying and there are reports of good coin and bar demand in Shanghai, plus excellent jewellery sales in Hong Kong,” said independent analyst Ross Norman.

Global spot prices were trading around $1,930 per ounce, bound for an about 1.4% weekly decline.

“China’s gold demand is expected to improve in the second half of the year due to stimulus policies aimed at boosting consumption,” said Bernard Sin, regional director, Greater China at MKS PAMP.

The China Gold Association said consumption rose more than 16% year-on-year in the first half of 2023.

Gold set for worst week in six as US yields surge before jobs data

Hong Kong premiums were little changed at $0.5-$2.5, while Singapore dealers charged $1.5-$2.5 premiums. Japanese dealers sold gold between at-par prices and $0.5 premiums.

In India, subdued demand forced dealers to offer discounts of about $3 an ounce over official domestic prices - inclusive of 15% import and 3% sales levies - versus $4 last week.

“Local prices are not coming down in sync with the global market because of the falling rupee. It’s creating uncertainty in the market,” said a Mumbai-based bullion dealer with a private bank.

Domestic prices were trading around 59,400 rupees per 10 grams, after falling to 57,951 rupees on June 29.

India “has now entered a seasonally slow period for consumption,” Standard Chartered analyst Suki Cooper said in a note.

The jewellery industry hoped for good orders during the India International Jewellery Show, which started in Mumbai earlier this week, said Vipul Shah, chairman of the Gem Jewellery Export Promotion Council.