ET:Asia Gold price drop prompts buying; seasonal lull caps interest
SINGAPORE/MUMBAI: Asia's physical buyers took advantage of a nearly 2 percent drop in prices in the previous session and booked cheaper material, but the seasonal lull after the Lunar New Year limited buying interest from China.
The surprisingly upbeat U.S. jobs data on Friday sent gold to its biggest one-day fall, as the improving economic outlook dampened hopes for further quantitative easing which would drive investors to bullion, a good hedge against inflation.
Gold bar premiums in Singapore stood at 70 cents to $1.20 an ounce above London prices, compared to 70 cents to $1 last Friday, dealers said.
"Thailand is back to buying after selling for the past two weeks," said a Singapore-based dealer, adding that Indonesia and India had been buying as well and light selling was spotted alongside.
Spot gold edged up 0.3 percent to $1,731.10 an ounce by 0732 GMT, off a one-week low of $1,723.49 hit in the previous session.
In Hong Kong, dealers reported lukewarm reaction to the sharp price drop from Chinese buyers.
"We don't see much buying interest, as the market is typically quiet after the Lunar New Year," said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
Premiums in Hong Kong stood around $1 an ounce, little changed from last week, dealers said.
In India, the world's largest gold consumer, traders booked deals on Friday and Monday to meet demand from the wedding season, seizing a buying opportunity after gold prices rose for four weeks straight.
"There is some buying after Friday's fall in prices, people are comfortable at these rates," said Harshad Ajmera, proprietor of JJ Gold House in the eastern city of Kolkata.
The firmer rupee also lent support to Indian buyers. The Indian currency rose to its highest level since late September.
WEEK AHEAD
Investors will closely track the development in the euro zone debt crisis, as Greece faces the deadline to accept terms of a new bailout to avoid an unruly default later in the day.
A renewed focus on Europe's banking and debt crisis may quickly sap the nascent optimism about global economic prospects that followed a remarkably solid U.S. January employment report.
