MUMBAI/BENGALURU: Gold was sold at a discount in India for the first time in six weeks on subdued demand as buyers bet that prices could fall still further after hitting near seven-month lows last week.
Meanwhile Chinese buying picked up on the back of a firm yuan and trade tensions with the United States.
"Jewellers bought gold in the last few weeks for exhibition. They have enough inventory," said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.
A five-day India International Jewellery Show kicked off earlier this week in Mumbai.
Dealers in India were offering a discount of up to $1.50 an ounce over official domestic prices this week, compared with a premium of $1.50 last week.
"As prices corrected, jewellers started buying in the last few weeks. They are now looking for a bigger correction before making purchases," said Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai.
In the Indian market, gold futures were trading around 29,641 rupees per 10 grams on Friday, after falling to 29,422 rupees earlier last week, their lowest since Jan. 11.
Premiums in top consumer China ranged between $2 and $3 an ounce this week, versus $1-$3 last week, while premiums in Hong-Kong were around 70 cents to $1.30 as against $1-$1.40 previously.
"There was some good buying in China as the currency strengthened and due to uncertainty over the trade war between U.S. and China," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
The Chinese yuan hit a one-week high against the dollar earlier this week. A weaker dollar makes dollar-priced gold cheaper for non-U.S investors.
In the latest development in the ongoing trade spat between the two major economies, the United States Trade Representative's office said it would begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23.
In Singapore, premiums remained unchanged at 80 cents.
"This week has been short because of the National Day (holiday)… so physical demand wasn't as good as we have seen a few weeks back when gold prices came down," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
"When gold prices come close to about $1,200 or a bit lower, we might see more buying."
Benchmark spot gold was on track for a fifth straight weekly decline, hovering near a 17-month low at about $1,210 an ounce
Demand remained quiet this week in Japan due to an upcoming national holiday, Obon, keeping premiums unchanged at 50 cents, a Tokyo-based trader said.