BENGALURU/MUMBAI (REUTERS) – Physical demand for gold jumped this week in Singapore as buyers took advantage of a recent slide in prices after investors dumped the metal to raise cash, while discounts in India narrowed despite closures due to the coronavirus outbreak.

In Singapore, premiums rose to US$0.70 to US$0.80 (S$1.01 to S$1.16) an ounce versus last week’s US$0.50 to US$0.60.

“Bullion sales went through the roof,” Silver Bullion sales manager Vincent Tie said.

“Gold demand is still high, possibly fuelled by the high chance of recession brought on by Covid-19 and also interest rates cut back to zero by the United States Federal Reserve.”

Spot gold prices have fallen 14 per cent from a more than 7-year high of US$1,702.56 an ounce hit earlier this month as the rapid spread of virus triggered panic and sparked a wide sell-off in assets.

But that has made bullion, which normally acts as a safe haven in times of crisis, attractive to some.

“The overall volatility has led to a huge surge in demand for physical precious metals … it has been the unfolding global financial crisis and the rush to safe haven tangible precious metals in light of this crisis,” said BullionStar Singapore precious metals analyst Ronan Manly.

In India, discounts narrowed to US$6 an ounce over official domestic prices this week, from last week’s discount of US$33.

The domestic price includes a 12.5 per cent import tax and 3 per cent sales tax.

“Prices are becoming attractive. Jewellers are making small purchases, but retail demand is still subdued,” said a Mumbai-based dealer with a bullion importing bank.

Indian gold futures were trading around 40,700 rupees (S$782.49) per 10 grams on Friday (March 20), having hit a record high of 44,961 rupees earlier this month.

“There is uncertainty over retail demand as jewellery shops in many parts of the country will remain closed at least next week due to the coronavirus outbreak,” said another Mumbai-based dealer with a private bank.

Meanwhile, the Bangladesh Jewellers Association lowered the prices of all types of gold, the first cut since September, citing uncertainty over the pandemic.

The new rates, with the best quality gold priced at 60,362 taka (S$1031.24) per Bhori, or 11.664 grams, came into effect from Thursday.

In top consumer China, prices swung between discounts of as much as US$17 an ounce and premiums of US$5, while in Hong Kong, gold was sold at par with the benchmark up to a premium of US$1 an ounce.

“Physical gold demand remains soft, some bargain hunters but not much,” said Mr Samson Li, Hong Kong-based precious metals analyst at Refinitiv GFMS.

In Japan, premiums of US$0.50 to US$1 per ounce were offered.