Singapore: Gold buying was slow this week in Asia even as global benchmark prices dropped from a three-month high, with the Chinese hooked on surging equities while demand in India stayed weak and was unlikely to pick up as the wedding season cools.
Premiums for bullion over international spot prices dropped in Hong Kong while prices in India were on par with the global benchmark.
"Demand is extremely slow. Customers are focusing on equity markets and aren`t really interested in gold for the time being," said Dick Poon, general manager at Heraeus Precious Metals in Hong Kong.
Gold premiums in Hong Kong dropped to around 50 cents an ounce, he said, from over a dollar last week.
Spot gold held above USD 1,200 an ounce this week, supported by expectations the Federal Reserve may not be in a rush to hike US interest rates given recent signs of weakness in the economy.
But a stronger dollar pushed the precious metal off a three-month high of USD 1,232.20 touched on Monday.
"Even if the price drops to USD 1,100 I really don`t see demand coming back," said Poon, as more investors move to higher-yielding equities.
Chinese stocks climbed to fresh seven-year highs on Friday and looked set for their biggest weekly gain in two months.
Premiums in top consumer China edged up slightly to around USD 1.50-USD 2 an ounce on the Shanghai Gold Exchange, compared with 50 cents to USD 1 last week.
Indian prices were on par with the global benchmark, compared with discounts of up to USD 2 earlier this month, traders said. In the black market, gold was sold at a discount of up to USD 5 an ounce this week.
"Demand has not improved much. Summer holidays have begun so demand is slightly lower. Prices have also gone up, hitting demand," said Bachhraj Bamalwa, director at All India Gems and Jewellery Trade Federation.
Demand will not pick up now as there are no festivals or weddings in the next three months or so, Bamalwa said.