By Rajendra Jadhav and Asha Sistla
BENGALURU/MUMBAI (Reuters) - Physical gold demand picked up in top Asian hubs this week as economies gradually come out of coronavirus lockdowns and as investors continued to buy bullion as a hedge against a worsening economic backdrop.
Dealers in top consumer China sold gold at discounts of $15-$20 an ounce versus benchmark spot prices, narrowing from last week's $28-$40 discounts.
"Some people are going out and demand is slightly better in China, people are getting back to work. There is investment side buying," said Ronald Leung, chief dealer, Lee Cheong Gold Dealers in Hong Kong.
In Hong Kong, gold was sold at a premium of $0.50-$1.75 per ounce.
Escalating U.S.-China tensions could boost physical gold demand as well, said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS, especially as spot prices are holding above $1,700 an ounce on fears an economic recovery may take longer than expected. [GOL/]
Consumption slightly improved in India too as a few jewellery stores opened after the government eased restrictions.
Jewellery shops in the southern state of Kerala opened this week after nearly two months but "customers are going through a difficult time due to the lockdown. We can expect normal demand only after a few months," said B Govindan, chairman of Kochi-based Bhima Jewellery.
India's gold imports plunged 99.9% year-on-year in April.
In Singapore, gold was sold at a premium of $1.25-$3 an ounce.
"(Spot) Gold price staying above $1,700 has bolstered investors' confidence. Investors are also buying gold because there's a growing narrative that a V-shaped recovery of the global economy now looks unlikely even when countries begin to restart economies in coming months," said Vincent Tie, sales manager at Silver Bullion.
"Singapore will begin to re-open the economy in three phases starting June. Most retail shops will continue to remain closed as only essential services companies will be allowed to operate in phase one."
In Japan, gold was sold at between par with the benchmark and a $0.50 premium.
(Reporting by Asha Sistla and K. Sathya Narayanan in Bengaluru and Rajendra Jadhav in Mumbai; editing by Arpan Varghese and Mark Potter)