MUMBAI/BENGALURU - Gold demand in India improved this week as local prices traded near a six-month low, prompting jewellers to replenish inventory, while weaker rates in Singapore saw demand pick up further there.
In the Indian market, gold futures were trading at around 29,740 rupees per 10 grams on Friday, after falling to 29,638 rupees last week, the lowest level since Jan. 19.
"Jewellers sold their stocks at higher levels in the past two-three months. Now they are building inventory in a phased manner," said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in Chennai.
Retail demand is still weak, but is likely to improve from mid-August as festivals are approaching, he said.
Dealers in India were charging a premium of up to $1 an ounce over official domestic prices this week, unchanged from the last week. The domestic price includes a 10 percent import tax.
"Some jewellers are still waiting for a bigger fall, but they will also start buying if prices fail to correct further in a week," said a Mumbai-based dealer with a private bank.
In Singapore, premiums ticked up to range between 90 cents- $1.1 this week, from 80-90 cents last week as demand firmed on weaker local rates, a Singapore-based trader said.
In top consumer China, however, premiums fell to $1-$2 range from $2-$4 last week amid a weaker local currency versus the dollar from an ongoing trade dispute with the United States.
"Demand in China has remained relatively weak amid lower liquidity and lacklustre price performance in domestic terms," GFMS analyst Samson Li said.
"With the increase of supply, it is not surprising that China's gold premia have been on the downside this year. After averaging $9.83 per ounce in 2017, the average Chinese premia fell to $7.11 in the first half of 2018, and falling further to just $3.57 in July," Li added.
China's net gold imports via main conduit Hong Kong jumped 40.3 percent in June from the previous month to their highest since March 2017 as banks took advantage of arbitrage.
Premiums in Hong Kong and Tokyo were unchanged from last week around 60 cents-$1.30 and 50 cents, respectively, traders and dealers said.
Meanwhile, spot gold was down 1 percent for the week and headed for a third consecutive weekly decline.