Slow Asian demand despite multi-year low gold prices

By Manolo Serapio Jr and Rajendra Jadhav

MANILA/MUMBAI (Reuters) - Asian gold demand hardly perked up this week even as the price of the precious metal languished near its lowest since 2010 with many would-be buyers predicting further price declines, keeping premiums steady in the world's top gold consuming region.

Gold is on course to post a sixth consecutive weekly loss, its longest retreat since 1999, after U.S. economic expansion in the first half backed expectations for the Federal Reserve to raise interest rates this year.

"Demand was only on the first day, Monday. The next day, it was down and the next days too," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong where, he said, gold is still sold at 90 cents to $1.10 an ounce over the global benchmark, the same as last week.

"I think people are still bearish on gold and because everyone is seeing all these bad news like a rate hike in September, no one wants to buy for now."

A U.S. rate increase cuts the appeal of assets that don't earn interest such as gold.

Gold's draw thinned even more after a July 20 rout that spurred more selling, pushing prices to $1,077 an ounce on July 24, the lowest since February 2010.

"Despite trading at multi-year lows, physical demand has been on the low side with premiums in China and India hardly moving," MKS Group trader Jason Cerisola said in a note.

On the Shanghai Gold Exchange, premiums remained at just over $1 an ounce while those in Singapore stayed at about $1, traders said.

A sustained selldown in Chinese equities, headed for their biggest monthly loss in six years, is not helping gold.

"In China, I think a lot of them are forced to sell gold at really discounted prices to pay off their stock losses. If gold is being sold off, I don't think anybody is buying yet," said Howie Lee, analyst at Phillip Futures in Singapore.

There were signs of a pickup in Indian demand although premiums only rose to $1.50-$2 an ounce from 80 cents to $1 last week, traders said. Premium rose to as much as $3 late last week, albeit briefly, they said.

"Demand has improved due to lower prices. Consumers are buying jewellery, but demand for coins and bars is still sluggish," said Princeson Jose, chairman of Prince Jewellery, a retailer with shops in southern Indian states.

"Jewellers have started restocking, but they are not making big purchases. They think prices could drop further before peak demand season at the year end," said a Mumbai-based bank dealer.

(Reporting by Manolo Serapio Jr. and Rajendra Jadhav; Editing by Himani Sarkar)