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Asia Gold-Stronger yuan pushes China discounts to 7-month low

* India premiums ease to $1.5/oz vs last week’s $2.5/oz

* Buyers waiting for a price correction -Indian wholesaler

* Spot gold prices hit 2-month high this week

BENGALURU/MUMBAI, Jan 8 (Reuters) - Physical gold discounts slipped to their lowest since June in top consumer China this week, as a stronger yuan encouraged some buying, while volatile prices slowed down buying in other Asian hubs.

Dealers in China offered discounts of $7-$10 an ounce to benchmark global prices, compared with last week’s $15-$20 discounts.

Because of the stronger renminbi, we are likely to see more demand in China, Peter Fung, head of dealing at Wing Fung Precious Metals, said, adding that gold prices could flip to a premium of around $2-$3 by mid-year.

Chinese dealers were forced to offer heavy discounts for much of 2020 as the COVID-19 pandemic choked retail demand.

“Demand for gold jewellery in 2021 is expected to see a notable gain on the back of a post-crisis recovery,” said Yiyi Gao, senior analyst at Metals Focus.

Gao, however, noted that expected strength in gold prices and structural consumption changes would still result in lower offtake than in 2019.

Spot gold prices scaled a two-month peak on Wednesday.

If gold above $2,000 becomes the norm with economic uncertainties, demand will accelerate, possibly constricting physical supplies leading to extended delivery times similar to that in 2020, said Vincent Tie, sales manager at Silver Bullion. In India, dealers charged premiums of $1.5 an ounce over official domestic prices, inclusive of 12.5% import and 3% sales levies, down from last week’s premium of $2.5.

“Buyers are confused due to volatile prices. They are waiting for a correction,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Investment demand for coins and bars has been slowly improving, said a Mumbai-based dealer with a bullion importing bank.

Demand was muted in Singapore, with premiums little changed from the prior week at $0.80-$1.30 an ounce, while Hong Kong premiums were unchanged at $0.50-$1.50 an ounce.

In Japan, gold traded flat to a premium of $0.50 an ounce to spot prices.

Reporting by Nakul Iyer in Bengaluru and Rajendra Jadhav in Mumbai, additional reporting by Diptendu Lahiri and Swati Verma; editing by Uttaresh.V

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