Asia gold price drop supports demand; Indian buyers bet on steeper dip

By Rajendra Jadhav and Nithin ThomasPrasad

BENGALURU/MUMBAI (Reuters) - Physical gold demand in most Asian hubs gained ground this week due to a fall in prices and as activity picked up following regional holidays, although a good portion of consumers in India held off purchases, hoping for a steeper dip in rates.

In India, the world's second biggest gold consumer after China, a correction in prices failed to reignite significant retail demand.

"Retail buying was negligible in the last few weeks. It could slightly improve this month due to weddings," said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in Chennai.

"From next month, demand would improve significantly due to the Akshaya Tritiya festival."

The festival is considered an auspicious occasion to acquire jewellery or property.

Local gold prices hovered near a two-week low of 30,201 rupees per 10 grams hit on Thursday, and was on track for a weekly decline of about 1 percent.

The prices hit a 15-month high of 30,839 rupees last month.

Dealers in India were charging a premium of up to $2 an ounce over official domestic prices, compared with a discount of $2 last week.

Gold was at a premium in India due to the price correction and as imports in January and February were lower than normal, a Mumbai-based dealer with a private bank said, adding that imports would improve in March.

Meanwhile, in China, demand picked up as business and investors returned from the Chinese New Year holidays, with gold sold at a premium of $8-$10 over benchmark rates this week, traders said.

Benchmark spot gold prices have fallen over 1 percent so far this week, pressured by a stronger dollar.

"There was modest demand from onshore Chinese sources and the premium of the SGE (Shanghai Gold Exchange) was again fairly lofty at around $8-$9 over the spot price (on Thursday)," MKS PAMP trader Alex Thorndike said in a note.

Premiums of 60 cents to a $1.20 were being charged in Hong Kong versus 40-80 cents last week, while in Singapore, premiums were unchanged at the 80 cent level.

"We've seen a bit of demand these last few days because prices came down," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

"(People) are also thinking that once the Chinese new year holiday is over and the China market is back, we might see gold prices receive more support. So they see this as a good time to get gold at a cheaper rate."

In Japan, premiums were unchanged from last week at 50 cents, a Tokyo-based trader said.

(Reporting by Nithin Prasad in Bengaluru, Rajendra Jadhav in Mumbai; Editing by Amrutha Gayathri)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)