Physical gold demand in top consumer China was muted this week as COVID-induced curbs dampened sentiment, while discounts in India narrowed to their lowest level in two months on a slight improvement in demand and lower scrap supplies.
"Demand (in India) is slowly improving but higher prices are working as a big deterrent for retail buyers," said Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai.
This week, dealers offered discounts of up to $12 an ounce over official domestic prices, inclusive of 10.75% import and 3% sales levies, down from last week's $40 discounts.
Discounts are falling because of lower March imports and as the flow of old jewellery and coins, or scrap supplies, have come down this week, said a Mumbai based bullion dealer with a private bank.
"(However), higher prices could spoil demand during upcoming festivals and wedding season," the dealer said.
In China, discounts of $4.25-$6 per ounce were offered versus global benchmark spot rates. Last week, Chinese dealers sold gold at anywhere between a $3 discount to a $2 premium.
"With this severe lockdown in both Hong Kong and Shanghai, the metal isn't moving significantly," said independent analyst Ross Norman, adding "Asian demand at the moment is very light and very weak." China's zero-COVID policy has put millions of people into lockdown, including the Shanghai financial hub, and is clogging highways and ports.
"Sentiment is pretty low over there, with lockdowns, confinement to home and some shortages of essentials starting to develop," said StoneX analyst Rhona O'Connell.
In Hong Kong, gold was sold at a discount of $1.80 to a premium of $0.80 an ounce, while Singapore saw premiums little changed this week at $1.30-$1.70 per ounce.
Meanwhile in Japan, gold changed hands at anywhere between a $0.50 discount to a $0.50 premium, traders said.
