Price run-up, holiday slowdown softens gold demand in Asia

By Sethuraman N R and Rajendra Jadhav

BENGALURU/MUMBAI (Reuters) - A rally in gold prices to the highest level in a month and the year-end holiday mood dampened demand across Asia.

Gold prices hit one-month peaks on Friday and were on track for their best year since 2010, driven higher over the past 12 months mainly by a weaker dollar and safe-haven buying prompted by global political uncertainties.

In top consumer China, premiums quoted this week were around$10 an ounce to the global benchmark, unchanged from last week.

"There was a bit of buying in China in the middle of the week, but (that) tapered as prices started rising," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"Overall, gold demand has been soft due to the holidays."

Hong Kong premiums were also mostly unchanged from the previous week at 70 cents.

In India, second largest gold consumer, dealers were offering a premium of up to $1 an ounce this week over official domestic prices, compared to a discount of $2 an ounce last week. The domestic price includes a 10 percent import tax.

"Both demand and supplies are limited. Many dealers are on leave. Retail buyers are also not making purchases," said Daman Prakash Rathod, a director at Chennai wholesaler MNC Bullion.

Local gold prices in India have gained 3.2 percent since falling to 28,055 Indian rupees per 10 grams ($1,365.80 per ounce) earlier this month, the lowest level since July 17.

"Trading is negligible due to holidays. Jewellers are not stocking due to price rise," said a Mumbai-based dealer with a private bank.

India's gold imports in November nearly halved from a year ago, industry officials and analysts said.

A quiet market ahead of the year-end holidays kept premiums flat in Japan, a Tokyo-based trader said.

Spot gold was trading near $1,297 an ounce late on Friday, hitting its highest since Nov. 28.

($1 = 63.8825 Indian rupees)

(Reporting by Nallur Sethuraman in BENGALURU and Rajendra Jadhav in MUMBAI; Editing by Tom Hogue)