Physical gold buying picked up pace in major Asian centres this week as lower prices fuelled appetite for the metal, with India seeing healthy demand ahead of the festive season despite a rise in domestic rates to a two-month high.
In India, the world's second-biggest consumer of the metal after China, gold futures rose to 30,700 rupees ($428) per 10 grams on Thursday, a peak since July 9.
Demand in India usually strengthens in the final quarter as the country gears up for the wedding season and major festivals such as Diwali and Dussehra, when buying gold is considered auspicious.
"Due to uncertainty over the rupee, jewellers are buying even after the recent price rise. They want to build inventory for the upcoming festive season," a Mumbai-based dealer with a private bank said.
The Indian rupee fell to a record low of 72.11 per dollar on Thursday.
Dealers in India were charging a premium of up to $1 an ounce over official domestic prices this week, unchanged from last week. The domestic price includes a 10 percent import tax.
"Since the rupee is falling, consumers are buying, expecting a further price rise," said Kumar Jain, a Mumbai-based jeweller.
India's gold imports more than doubled in August as lower prices prompted manufacturers to replenish inventory for the five-day India International Jewellery Show in Mumbai, data from metals consultancy GFMS showed.
Premiums in China were little changed from last week at $6-$7 an ounce, traders said.
"There is very good interest in buying at current levels as prices have come a long way from $1,300," said Ji Ming, chief analyst at Shandong Gold Group.
Benchmark spot gold prices have tumbled about 12 percent from a peak of $1,365.23 in April.
Premiums in Hong Kong were around $0.90 to $1.40 an ounce versus $0.90-$1.30 previously.
"There is a lot of demand for the kilobar. There has been demand from manufacturers and jewellers, who want to be ready ahead of the festival season," said a Hong Kong-based official with an international refiner.
Premiums in Singapore were between $0.70 and $1.50, as against $0.80-$1.30 an ounce last week.
Demand in Hong Kong and Singapore was better than the average over the last few weeks, said Joshua Rotbart, managing partner, J. Rotbart & Co in Hong Kong.
"Investors are getting used to the new price range and feeling more comfortable re-entering the market at this level."
In Japan, premiums rose to 50 cents from last week's 25 cents, on retail demand for gold coins and bars, a Tokyo-based trader said.
