"People are in a festive mood and travelling, so they are not interested in making purchases at these record-high price levels," said a jeweller based in the eastern Indian city of Kolkata.
Domestic gold prices hit a record high of ₹139,286 ($1,550.34) per 10 grams on Friday, following a rally in international spot gold rates. [GOL/]
Spot gold notched an all-time high of $4,530.60 per ounce, driven by speculative and momentum-driven buying, as well as expectations of more US rate cuts and rising geopolitical tensions.
This week, Indian dealers were offering a discount of up to $61 per ounce over official domestic prices, inclusive of 6% import and 3% sales levies, up from last week's discounts of up to $37.
"The slowdown in demand is deepening as prices continue to rise. Demand is likely to remain muted over the next few weeks unless there is a significant correction in prices," said a Mumbai-based bullion dealer with a private bank.
In top consumer China, bullion traded at discounts of $15 to $30 an ounce to the global benchmark spot price, narrowing sharply from last week's discounts of up to $64, the deepest in more than five years.
Chinese discounts had hit a record high of $87.50 in August 2020 due to a slump in retail demand caused by the COVID-19 pandemic.
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Discounts narrowed despite muted retail demand, as speculative buying picked up at record-high prices amid expectations of U.S. rate cuts and constrained supply due to a lack of new import quotas from the People's Bank of China, said Bernard Sin, regional director- Greater China, MKS PAMP.
A firmer yuan also lent support, he said.
In Singapore, gold was sold at premiums ranging from $0.50 to $3.50 an ounce.
"The major purchases are made on silver and platinum, not gold. As usual, once we see the run-up in gold, that's when buy orders come in due to 'FOMO'," said Vergel Villasoto, director at Silver Bullion, referring to the fear of missing out.
In Hong Kong, gold traded at par to $2 premium, while in Japan, bullion was sold at a discount of $6.0 to a $0.5 premium over spot prices.
