Asia Gold-Lofty prices smother purchases in top hubs; China issues import quotas

* Purchases slowed after prices rose above 70,000 rupees- Indian dealer * Deeper discount in China becoming increasingly likely- MKS PAMP * China issues new gold import quotas after pause By Daksh Grover and Rajendra Jadhav Aug 23 (Reuters) - A rally in gold prices stifled demand in major Asian hubs this week, with dealers offering deeper discounts to charm buyers and bullion flows into top consumer China expected to be facilitated by the issuance of new import quotas. "A deeper discount in the Chinese gold market is becoming increasingly likely, reversing the recent premium trend," said Bernard Sin, regional director of Greater China at MKS PAMP. "While the People's Bank of China has successfully defended the yuan against capital flight, the recent issuance of import quotas demonstrates a cautious approach to managing the gold market." Dealers in China XAU-CN-PREM were offering discounts of between $18 to $3 per ounce on the international spot price, compared to a $8.5 discount to a $5 premium last week. "Seasonal demand from China is not expected until later in the year," said precious metals strategists at UBS. Combined imports to China and India in July were down 58% year-on-year, though the year-to-date volumes are still up by 5% given the strong start to the year, UBS said. In India, domestic prices MAUc1 were hovering around 71,350 rupees ($850.72) per 10 grams on Friday. Prices have been highly volatile in recent weeks due to the duty cut and a rally in global markets, causing confusion among retail buyers, said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji. Indian dealers offered a discount XAU-IN-PREM of up to $6 an ounce over official domestic prices this week, inclusive of 6% import and 3% sales levies, up from last week's $3 discount. "Jewellers were placing orders when local prices were around 68,000 rupees, but their purchases slowed after prices rose above 70,000 rupees," said a Mumbai-based bullion dealer. In Singapore, bullion was sold between a discount of $0.30 to a $2.25 premium XAU-SG-PREM , while in Hong Kong, it was sold between at par to a $2.00 premium XAU-HK-PREM . Dealers in Japan XAU-TK-PREM sold gold at a $3.0 discount to par levels. ($1 = 83.8700 Indian rupees) (Reporting by Daksh Grover, Swati Verma and Rajendra Jadhav in Bengaluru) (([email protected];))