By Rujun Shen
SINGAPORE (Reuters) - Physical gold buying from China and elsewhere in Asia slowed this week after a second week of gains for the precious metal and as prices approached a key resistance level.
Spot gold hovered around $1,590 an ounce, up nearly 1 percent so far this week and pulling further away from a seven-month low of $1,554.49 hit in late February.
Chinese buyers rushed into the market last month after gold fell more than 3 percent during the week-long Lunar New Year holiday, pushing the premium for domestic gold prices over spot to more than $20 an ounce, compared with mostly single-digit figures in 2012.
That buying spree eased as the metal purchased in late February and early March has started to arrive in the market, relieving the supply shortage and pushing down premiums.
"We started to see a lot of physical stocks moving into China, and expect the premiums in domestic prices to come off further," said a Singapore-based trader.
More From This Section
The average daily combined trading volume of the three main gold contracts on the Shanghai Gold Exchange fell for the third week straight to 31,373 kilograms, down more than a third from 48,700 kilograms seen in the week following the Lunar New Year break.
Premiums on gold bars in Singapore and Hong Kong were steady, with dealers quoting $1.20 an ounce in Singapore and $1.40 to $1.60 in Hong Kong.
"On the retail side, these past two weeks it is a little quieter but we still see people buying," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.
Shipments to India, the world's top gold consumer, retreated ahead of an inauspicious buying period around the festival of Hoi in the last week of March, and as traders face limited liquidity ahead of the end of the fiscal year.
"March imports are just 12 imported tonnes so far in the month compared to 180 tonnes in January and February," said Pankaj Kumar Agarwal, director with Brijwasi Bullion, a wholesaler in Lucknow.
Imports are likely to revive when the new fiscal year kicks off in the beginning of April, traders said.
Gold for April delivery on the Multi Commodity Exchange stood at 29,368 rupees per 10 grams, or $1,686 an ounce.
WEEK AHEAD
Bullion market participants will be watching the Federal Reserve's policy meeting next week. A hawkish tone would further hurt investors' interest in gold, but Asian buyers would make purchases if prices drop near February's levels.
(Additional reporting by Siddesh Mayenkar in MUMBAI; Editing by Michael Urquhart)