* China curbing gold imports in bid to limit yuan outflow
* China gold premium at $24/oz this week vs $30 last week
* Despite wedding season, Indian demand down 70-80 pct
By Sethuraman N R and Rajendra Jadhav
BENGALURU/MUMBAI, Dec 2 Gold premiums in China
held near three-year highs this week amid limited supply of the
precious metal with traders saying Beijing was restricting
imports, while prices in India swung to a discount as a severe
cash crunch dampened appetite.
The import curbs may be part of China's efforts to limit
outflows of the yuan after the currency's slide to its weakest
in more than eight years, traders say. China allows only 15
banks to import gold, including three foreign lenders.
"There is severe restriction on the banks' quota to import
gold into China. Each one of them have to justify their need," a
Hong Kong-based banker said.
Gold was sold in China at about $24 an ounce above the
international spot benchmark this week. Premiums went as
high as $30 last week, the most since January 2014, according to
Thomson Reuters data.
"Supply has been limited and so the premiums have held
firm," said Cameron Alexander, analyst with Thomson
Reuters-owned metals consultancy GFMS.
Spot gold recovered from its lowest since February to trade
at $1,175 an ounce on Friday, but was still on track for a
fourth consecutive weekly decline.
In India, the world's No. 2 gold consumer after China,
demand remained sluggish despite falling prices.
Dealers offered a discount of up to $4 an ounce this week
over official domestic prices that include a 10 percent import
tax, compared with a premium of up to $3 last Friday.
"Wedding season is going on, but demand is 70-80 percent
lower than last year," said Fatechand Ranka, a jeweller based at
Pune in western state of Maharashtra. "Consumers don't have
currency notes to buy gold."
Last month, Prime Minister Narendra Modi scrapped 500 and
1,000 rupee banknotes, or 86 percent of the value of cash in
circulation, in a crackdown on corruption, tax evasion and
Indian jewellers rely on the wedding season for sales during
winter months after the end of key festivals such as Diwali.
Weddings account for more than half of the country's annual
demand for gold, according to GFMS.
"Prices are attractive, but most jewellers are not buying,
expecting a further fall in global prices if the Federal Reserve
raises interest rates," said a Mumbai-based dealer with a
In Hong Kong and Singapore sellers offered premiums of
between 80 cents and $1.20 an ounce. Discounts in Tokyo widened
to 50 cents this week from flat last week.
(Additional reporting by Swati Verma in Bengaluru; Editing by
Manolo Serapio Jr.)