Physical gold demand in India fell sharply due to high domestic prices, forcing dealers to quote steeper discounts this week, with other Asian hubs seeing muted bids, barring China, which witnessed rising premiums.

“This is traditionally a lean demand season. Except for a few southern states, demand remains weak across the country. This year, price volatility is further dampening the demand,” said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.

Gold was trading at around 62,800 rupees ($755.45) per 10 grams on Friday in India, near the record highs hit this month, dampening demand in the second biggest consumer of the precious metal.

Dealers were offering a discount of up to $16 an ounce over official domestic prices — inclusive of the 15% import and 3% sales levies, versus last week’s $14.

The sharp slowdown in retail demand is prompting jewellers to scale back purchases and wait for price stabilization, said a Mumbai-based bullion dealer with a private bank.

Asia gold: India discounts hit 7-month high as price surge dents demand

In China, premiums climbed to $34-$41 per ounce over global spot prices, up from $20-$40 premiums charged in the previous week.

“This uptick in demand was attributed to utilization of import quotas, with monetary policy providing a supportive backdrop,” said Bernard Sin, regional director of Greater China at MKS PAMP.

“We anticipate that the People’s Bank of China (PBOC) will reduce the issuance of import quotas in 2024,” Sin said, adding that China’s gold demand next year is likely to hinge on its policy decisions.

In Singapore, premiums of $1-$2.25 per ounce were quoted for the bullion. Dealers in Hong Kong charged $0.5-$2 per ounce premiums, narrowing the range from those quoted last week.

“Physical demand is a bit slow due to the high price and year end coming,” said Dick Poon, general manager at Heraeus Metals Hong Kong Ltd.

In Japan, dealers sold gold at par to $1 premiums.