Band Rajendra Jadhav and Asha Sistla

March 4 (Reuters) – Rising domestic gold prices deterred buyers in major Asian hubs as others waited on the sidelines watching the Russian-Ukrainian conflict closely as Hong Kong’s COVID-19 further dampened the appetite.

Spot Gold Price XUA= rose about 3% this week as the war in Ukraine encouraged financial investors to buy bullion as a hedge. GOL/

The higher prices put off buyers of the physical metal.

In China, gold was selling in a range of $2 discount and $0.8 premium to spot prices. This compares to premiums of $2 to $6 over spot prices last week.

Rising prices and uncertainty over Ukraine have dampened interest in physical gold, but that may improve in the medium term as the situation evolves, said Peter Fung, head of trading at Wing Fung. Precious Metals.

A recovery in domestic prices MAUc1which peaked since August 2020 last week, has also stifled demand in India.

“Consumer demand is almost zero,” said Prithviraj Kothari, managing director of Mumbai-based RiddiSiddhi Bullions.

This prompted dealers to offer discounts of $27 an ounce off official domestic prices – including 10.75% levies on imports and 3% on sales – the largest in nearly 18 months, compared to $18 last week.

Jewelers looking to stock up for the wedding season are skeptical of retail demand at higher prices, said a Mumbai-based dealer with a private bank.

Hong Kong saw gold change hands in a range from $2 discount to $1 premium, compared to premiums of $1 to $2.50 previously.

“The physical market is quiet and I don’t think demand will pick up as the government considers a partial lockdown due to the COVID situation,” said Dick Poon, managing director of Heraeus Metals Hong Kong Ltd.

Singapore saw premiums drop from $1.80-2.50 to $1.60-2 last week.

“The costs of gold mining will also rise, with higher oil prices likely driving gold production at a higher price,” said Vincent Tie, sales manager at dealership Silver Bullion. WHERE

(Additional reporting by Bharat Govind Gautam in Bengaluru; Editing by Arpan Varghese and Krishna Chandra Eluri)

((Asha.Sistla@thomsonreuters.com))

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