Gold demand in India slightly improved this week after prices corrected from a record high but retail purchases remained lower than normal prompting dealers to widen discounts, while demand in China also suffered with premiums edging lower.

In India, the world’s second-largest gold consumer and a major importer, domestic prices were trading around 71,500 rupees per 10 grams on Friday, after hitting a record high of 74,442 rupees earlier this week.

Gold prices have come down, but retail consumers are still waiting on the sidelines, expecting an even bigger fall, said Ashish Pethe, partner at Waman Hari Pethe Jewellers.

Indian dealers offered a discount of up to $13 an ounce over official domestic prices - inclusive of 15% import and 3% sales levies, versus last week’s discount of $10.

In the second half of the week, a few jewellers made small purchases to replenish stocks, said a Mumbai-based bullion dealer with a private bank.

Meanwhile, India’s gold imports in 2024 could fall by nearly a fifth from the previous year, the head of an industry body told Reuters.

Asia gold: Dealers lower rates for physical purchases as high prices bite

In top consumer China, premiums were seen between $15-$20 per ounce over benchmark spot prices, versus $16-$30 last week.

Besides higher prices earlier in the week, the recent correction in spot gold may have spooked some investors, leading them to wait for a better entry point, potentially dampening demand for physical gold, said Bernard Sin, regional director, Greater China, at MKS PAMP.

Spot gold prices were set for their biggest weekly drop in over five months.

If gold touches the $2,300 level, we can see some physical buying interest coming back into the market, said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

Bullion is being sold between at par to $2.50 premiums in Singapore, and at par to $2.00 premiums in Hong Kong.

In Japan, dealers sold gold at a $0.25-$0.50 premium, slightly lower than last week’s range.