Physical gold dealers in India were forced to offer discounts this week, as record high prices dampened demand ahead of a key festival, while discounts in top consumer China narrowed, reports Reuters.
In India domestic prices hit a record high of 77,641 rupees ($923.85) per 10 grams, up more than 15 per cent from a four-month low of 67,400 rupees hit in July.
"The ongoing price rally is slowing down the demand. Consumers are buying less volume because they need to allocate far more money if they want to buy the same volume they planned with the rising prices," said Bachhraj Bamalwa, partner at Indian jewellery retailer Nemichand Bamalwa & Sons.
Indian dealers offered a discount of up to $8 an ounce over official domestic prices, - inclusive of 6 per cent import and 3 per cent sales levies, versus last week's $3 premium.
"Jewellers aren't feeling too confident about Diwali sales this year due to rising gold prices. To keep customers interested, many are offering discounts on jewellery making charges to help boost their sales during the festive season," a Mumbai-based bullion dealer with a private bank said.
Indians will celebrate Diwali in late October, when buying gold is consider auspicious.
Chinese dealers narrowed discounts to $3-$14 below international spot prices , from $15-$31 discounts quoted last week. In Hong Kong, gold was sold between $2 discount and $1.20 premium.
Recently, China has sharply ramped up policy stimulus, but markets are waiting for a clearer road map on economic recovery.
Retail gold demand in China has taken a hit this year amid sky-high prices and economic slowdown.
Chinese demand unlikely to recover in the next three months as prices will rise further, said Peter Fung, head of dealing at Wing Fung Precious Metals, Hong Kong.
Hong Kong leader John Lee on Wednesday pledged to promote the development of world-class gold storage facilities in the region.
