BENGALURU/MUMBAI - Physical gold was sold at a discount in India this week for the first time in three weeks as demand for the metal slumped due to a jump in local rates, while the Lunar New Year holiday capped buying at the end of the week elsewhere in Asia.
Demand was down to a quarter its usual levels as buyers were deterred by a recent price rise, said Harshad Ajmera, the owner of JJ Gold House, a wholesaler in the Indian city of Kolkata.
In the local market, gold was trading around 30,810 rupees per 10 grams, after hitting a 15-month high of 30,836 rupees hit earlier on Friday.
Dealers in India were offering a discount of up to $3 an ounce on Friday over official domestic prices, compared to a premium of $1.50 last week.
Jewellers were waiting for a correction in prices before stocking up inventories, a Mumbai-based dealer with a private bank said.
Gold demand in India was likely to remain below its 10-year average for a third year in 2018 as higher taxes and new transparency rules on purchases were expected to cap last year's rebound in buying, the World Gold Council (WGC) said this month.
India's gold imports in January dropped 37 percent from a year ago to their lowest in 17 months.
Demand in rest of Asia picked up in the first half of the week as people bought gold ahead of Lunar New Year.
"It was a little bit later than expected. But people were happy to see the demand coming in finally ahead of the Lunar New Year. There was solid demand for restocking from jewellers," said Stephen Innes, APAC head of trading at Oanda.
"Jewellers were reporting good sales from Valentines Day and it stayed on for the New Year," he said.
Premiums in China eased to $3-$4 an ounce from about $7-$8 at beginning of the week.
Gold prices edged higher on Friday, heading for their biggest weekly percentage gain in nearly two years.
Traders expected demand to be low going forward as a week-long Lunar New Year holiday started on Thursday.
In Japan, gold was sold in a range of par with the benchmark and a 10 cent premium as demand rose after yen strengthened in the week, a Tokyo-based trader said.