India gold demand weakens as volatile prices deter buyers; China on holiday

Gold demand remained subdued in India this week as volatile prices deterred buyers while other ​major Asian hubs, including China, were closed on account of ​the Lunar New Year holidays.

Bullion dealers offered a discount of of ‌up to $18 per ounce to official domestic gold prices - inclusive of 6 per cent import and 3 per cent sales levies, up from last week's discount of up to $12.

"Retail demand is not picking up because of volatile prices, even though the wedding season is underway, and jewellers are making every effort to lure buyers by offering discounts on making charges," said a New Delhi based jeweller.

Domestic gold prices were trading around ₹155,000 per 10 grams on Friday, having hit a record high of ₹180,779 last month ‌before sliding to as low as ₹133,687 earlier in February.

Gold exchange-traded funds saw strong inflows last month, offsetting a slowdown in jewellery demand, but this month demand from both the investment and jewellery segments has weakened, said a Mumbai-based bullion dealer with a private bank.

Flows to India's gold ETFs more than doubled in January from the previous month to ₹24,040 crore, ​putting them just ahead of equity flows for the first time, Association of Mutual Funds ‌in India data showed.

Markets in China, Singapore and Hong Kong were closed this week for the Lunar New Year.

Spot gold prices were trading ​around the $5,000 ‌an ounce level as of 0540 GMT, up from a one-month low of $4,403.24 touched ‌earlier this month. Gold had scaled a record high of $5,594.82 an ounce on January 29. 

In Japan, gold was sold at a discount of $10 to ‌premiums ​of up to $1.

"We ​saw a little interest for small bars but not active, looks like (investors will) wait for another dip to buy," said a Tokyo-based precious ‌metals trader.