Gold demand in Asia eroded this week due to higher prices with a seasonal slowdown denting the lure for the precious metal in second-biggest consumer India.
Discount given
Dealers in India offered discounts for gold, as the absence of key festivals kept demand subdued, especially as the wedding season has passed.
“Every year, demand remains weak in July. There is no major festival this month. Wedding season is almost over,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city Kolkata.
“For the next three to four weeks, demand will remain on the lower side. It will improve from the second half of August.”
Dealers were offering a discount of up to $1 an ounce this week over official domestic prices, compared to a discount of $1.20 last week, said four sources from jewellers, banks and gold dealers. Local gold prices have risen 2.7% since July 10 after falling to the lowest level in 6 months.
“The recent rebound in prices is also keeping buyers on the sidelines. They are waiting for a clear trend,” said a Mumbai-based dealer.
“Demand has softened again at current price levels. It had picked up when gold was trading closer to $1,200, but has again abated as the market waits for a clearer indication as to which way it may swing,” said Cameron Alexander, an analyst with metals consultancy GFMS.