* India switches to premium of $2.5/oz vs last week’s $2 discount
* China discounts unchanged at $15-$20/oz
* Dealers concerned about new coronavirus variant
* Spot gold prices set for 1% gain this week
BENGALURU/MUMBAI, Dec 31 (Reuters) - Physical gold demand remained largely muted across top Asian hubs this week as holidays kept buyers at bay, although prices in India flipped to a premium due to constrained shipments.
“Retail demand is negligible as people are in vacation mood,” said a Mumbai-based dealer with a bullion importing bank.
Indian dealers were charging a premium of up to $2.5 an ounce this week over official domestic prices, inclusive of 12.5% import and 3% sales levies, up from last week’s discount of $2.
Gold imports have nearly stopped in the last few days as most overseas banks are closed for vacation, allowing local dealers to charge a premium despite weak demand, said a Chennai-based bullion dealer.
Local gold futures were trading around 50,200 rupees per 10 grams on Thursday.
Spot gold prices were on track for a 1% gain this week.
In China, discounts were unchanged from previous week at $15-$20 an ounce as demand remained muted amid the year-end holidays, while in Hong Kong, premiums held steady at $0.50-$1.50 as the pandemic continued to stifle activity.
Despite lacklustre physical gold purchases, which forced dealers in the world’s biggest bullion consumer to offer steep discounts on gold for most of 2020, dealers expect demand to recover next year as consumer who held back on buying return to the market.
In Singapore, an uptick in demand marginally widened premiums to $0.90-$1.30 an ounce from last week’s $0.90-$1.20.
“We’ve seen more corporates coming to buy (for year-end gifts) and also retail buying; they are using this opportunity of lower gold prices compared to the past few months to purchase,” said Brian Lan, managing director at dealer GoldSilver Central.
But dealers were worried about the spread of a more infectious coronavirus variant that is up to 70% more transmissible than the original.
“Not all is rosy at this point, hopefully the vaccine will control this new strain,” Lan said. (Reporting by Sumita Layek in Bengaluru and Rajendra Jadhav in Mumbai; Editing by Arun Koyyur)