Gold prices have risen more than 21 per cent so far in 2019

Highlights Gold purchases lower than usual on Dussehra as prices remain high

Gold futures remained around Rs 38,100 per 10 grams on Friday

Yellow metal rates have increased more than 21% so far this year

Gold purchases in India around Dussehra were lower-than-usual because of higher prices, while demand in top-consumer China was subdued this week as investors awaited the outcome of crucial trade negotiations with the US. The Dussehra festival - when buying gold is considered auspicious - was celebrated in India on Tuesday, October 8.

"Consumers were struggling to adjust (to) the higher prices. Jewellers across the country have reported nearly 50 per cent drop in Dussehra sales from a year ago," Anantha Padmanabhan, chairman of the All India Gem and Jewellery Domestic Council (GJC), told news agency Reuters.

Gold futures were trading around Rs 38,100 per 10 grams on Friday after hitting a record high of Rs 39,885 last month. Gold prices have risen more than 21 per cent so far in 2019.

Dealers offered discounts of up to $20 an ounce on official domestic prices this week, slightly down from a discount of $21 last week. The domestic price includes a 12.5 per cent import tax and 3 per cent sales tax.

"We were hoping (the) market will come to premium this week due to Dussehra and lower imports, but demand was very weak," said a Mumbai-based dealer with a bullion importing private bank.

Demand could improve in the second half of October due to Diwali festival and discounts could narrow, he said.

Gold imports in the country plunged 68 per cent year-on-year in September to their lowest in over three years as record domestic prices curbed retail buying, a government source said last week.

In China, bullion was sold at a $5-$8 per ounce premium over the benchmark with activity subdued even after the country returned from a week-long "Golden Week" holidays.

"Demand is still quite low at this level since people are uncertain of the political situation between US and China," said Peter Fung, head of dealing at Wing Fung Precious Metals.

"When the Chinese market opened there was slight uptick in demand, but it is still slow as people are concerned about the trade war."

Washington and Beijing have been engaged in a 15-month long trade war and investors are hoping for a de-escalation or breakthrough in the trade talks between the two parties this week.

In Hong Kong, gold was sold at a premium of 50 cents to $1.30 an ounce. The ongoing protests in the region have led to the closure of malls, hurting jewellery sales, traders said.

Sellers in Singapore charged premiums between 50-80 cents an ounce over the benchmark, versus 50-70 cents last week.

Gold in Japan was sold at par with the benchmark, a Tokyo-based trader said, as bullion priced in Japanese yen remaining at elevated levels.