Singapore / Delhi: Gold jewellery makers in India were offering discounts to attract buyers as sales slowed to a trickle despite approaching Diwali in the world’s largest consumer of bullion.

Low shine: A woman tries a gold bangle at a jewellery shop in Siliguri, West Bengal. India consumes 800 tonnes of gold annually. Rupak De Chowdhuri / Reuters

But in other parts of Asia, gold’s falls from a two-month high last week ignited buying from jewellers in Indonesia and Thailand as well as retail investors in Japan, keeping premiums for gold bars steady on Tuesday.

Gold was trading at $846 (Rs40,354) an ounce, up $15.20 from New York’s notional close on Monday. It hit a two-month high of $931 on Friday on a weak dollar before tumbling as investors sought cash to cover margin calls from losses in equities.

“All the equity wealth has eroded and people are trying to keep normal funds to meet their day-to-day expenses," said Krishna Kumar Nathani, managing director of

“Dealers are offering discounts of up to Rs60 per gram on the international prices. Diwali sales won’t be very good," said Nathani, referring to the Hindu festival of lights on 28 October.

Sales normally pick up in India ahead of the religious festivals, during which many weddings also take place. But buyers were hard to find, especially with gold prices on the Multi Commodity Exchange of India Ltd also holding near record after a recent decline in the rupee.

“People have no funds. Local gold prices are quoting below international prices by around Rs300 per 10 grams," said Harmesh Arora, vice-president of the Bombay Bullion Association.

“The sales are down to hardly 10 to 12% of normal sales," said Arora, adding that investors who had bought gold in early August at below $800 also booked profits.

Gold jewellery forms an important part of a dowry as parents prefer to give gold to their daughters for financial security. India devours 800 tonnes of the metal, more than 30% of annual global gold mine production, mostly as jewellery.

“I guess the volatility in gold prices comes from factors other than physical buying or selling. The volatility is probably caused by fears and concerns in the financial markets," said Adrian Koh, analyst at Phillip Futures Pte Ltd in Singapore. “I am not too sure about the physical buying in gold but I guess they will be more careful on entering the markets."

But physical dealers said jewellers snapped up gold at lower levels in other parts of Asia. Premiums paid for physical gold supplies above spot London prices were steady at $1 and at 50 cents in Singapore and Hong Kong, respectively.

“Demand is very good. Basically, everybody is calling up for physical gold, mostly from jewellers," said a dealer in Singapore.

“There’s good demand for physical gold. In fact, some people bought gold at our shops even during the holiday," said a dealer at a main bullion trading house in Tokyo.