(Minews) - Higher gold prices have limited buying interest in top consumer China to some extent in recent days, but demand remained stronger than last month due to the upcoming Lunar New Year holiday, traders and dealers said.
Premiums in Shanghai were $2-$3 an ounce on Monday and last week. Local prices were as high as $7 above the global benchmark earlier this month.
Gold climbed to a five-month high of $1,306.20 an ounce last week, when it also posted its third straight weekly gain.
Premiums generally tend to be higher early in the year due to the Lunar New Year, when gold is bought widely in China for gifts. The holiday falls in February this year.
Traders said imports continued strong despite slightly lower levels in recent days.
Jewellery demand in China has seen a "considerable" uptick in January compared to December, said Sara Zhao, an analyst with Thomson Reuters GFMS.
"Buyers are again out in force across China, prepared to wait in long lines to procure their golden gifts for the Spring Festival," said Zhao, referring to the new year holiday.
Chinese consumers might wait as long as they could for a price drop before buying their gifts, while a sharp fall in prices could significantly boost buying, she said.
Premiums in Hong Kong, the main conduit for gold into China, were around 50-70 cents an ounce, compared with $1.20 earlier this month, dealers said.
In India, the second-biggest consumer of gold, demand was subdued, with local prices trading at a discount to the global benchmark.
"Gold is still in discount of around $3-$4 in Mumbai because demand is weak," said Prithviraj Kothari, executive director of the India Bullion & Jewellers' Association.
Last week, the discounts varied from $4 to $16 in different Indian cities.
Supplies remained adquate, which was also a factor in the discounts. Indians imported huge quantities late last year, anticipating tighter curbs.
"Demand is not picking up and imports are expected to remain very much less in January as well. Retailers are not placing fresh orders in this dull market," said Kothari.
Expectations that India could soon lower the import duty on gold, currently at a record 10 percent, have also dampened demand.
