A dip in prices earlier this week fuelled an uptick in physical gold demand in Singapore and India, with activity in the Indian market also gathering pace ahead of key festivals. However, overall activity was muted due to the golden week holiday in top bullion consumer China.
In Singapore, sellers charged premiums between 50 and 70 an ounce over the benchmark, versus 50-80 cents last week. Global benchmark spot gold prices fell to their lowest in nearly two months, at $1,458.50, early in the week, but have since recovered above the $1,500 level.
"Demand was high earlier this week as prices went down briefly below the $1,500 mark. We believe this psychological benchmark will continue to affect investors' decisions on what the right time for buying is," said Joshua Rotbart, managing partner at J. Rotbart & Co in Hong Kong.
Traders also hoped demand would increase in the final quarter as India gears up for festivals such as Diwali and Dussehra, when buying gold is considered auspicious.
"Generally, during this period, jewellers take time to increase purchases to have more variety in jewellery," said Brian Lan, managing director at Singapore dealer GoldSilver.
The Indian market was also helped by a dip in domestic prices with gold futures trading around 38,200 rupees per 10 grams on Friday after falling to 36,771 rupees on Wednesday, the lowest since August 13.
The week started with aggressive buying from jewellers as prices corrected, said Chanda Venkatesh, managing director of CapsGold, a bullion merchant in the southern city of Hyderabad.
"But from Thursday again, demand started faltering due to a rebound in prices."
Dealers offered discounts of up to $21 an ounce over official domestic prices on Friday, up from a discount of $10 on Wednesday and about $40 last week. The domestic price includes a 12.5% import tax and 3% sales tax.
Retail purchases could rise next week due to Dussehra, said a Mumbai-based dealer with a bullion importing bank. India's gold imports plunged 68% year-on-year in September to their lowest in over three years as record domestic prices curbed retail buying, a government source said.
In Hong Kong, gold sellers were charging premiums of $0.30-$0.50 cents versus last week's 50 cents to $1 range, with drawn out protests in the financial hub taking their toll on jewellery demand, dealers said.
"After the mainland China market opens, we could see some good demand," said Peter Fung, head of dealing at Wing Fung Precious Metals. In Japan, gold was sold at par with the benchmark, a Tokyo-based trader said, adding a twice-delayed increase in sales tax has also deterred gold buyers.