(Corrects India's local gold prices in ninth paragraph)
* Retail demand down, especially in rural areas- India
* Chinese premiums widen to $4-$11/oz
Aug 5 (Reuters) - Gold premiums in China rose this week on
safe-haven demand driven by rising tensions with the United
States over Taiwan, while higher domestic prices cooled buying
activity in India.
Chinese dealers charged premiums of $4 to $11 an ounce over
benchmark spot gold prices, compared with $4 to $8.5 last
An unannounced stop in Taiwan by U.S. House of
Representatives Speaker Nancy Pelosi earlier this week prompted
China to hold live-fire drills around the island Beijing
considers its own.
"Tensions between the U.S. and China continued to escalate
(and) the premium in SGE (Shanghai Gold Exchange) traded as high
as $11 whilst no signs of import quota issued in coming days,"
said Bernard Sin, regional director for Greater China at MKS
The People's Bank of China controls how much gold enters
China through a system of quotas to commercial banks.
Despite the safe-haven boost, overall activity was subdued,
said Peter Fung, head of dealing, Wing Fung Precious Metals.
Citi analysts said on Thursday an economic slowdown could
crimp Chinese demand.
Hong Kong dealers sold gold between on par with the
benchmark to $1.80 premiums.
In India, local gold prices hit their highest since
July 5 at 52,525 rupees per 10 grams.
"Prices are very volatile. Buyers are struggling to
understand the trend. They're postponing purchases," said a
Mumbai-based dealer with a private bullion importing bank.
Dealers offered discounts of about $14 an ounce over
official domestic prices inclusive of 15% import and 3% sales
levies versus last weeks $6 discounts.
"Retail demand has slowed substantially, especially in rural
areas. Prices need to correct by 3-4% to bring back buyers to
jewellery stores," said a New Delhi-based dealer.
Singapore premiums were at $1.80 to $2.30.
"Prices have gone up, so there were less people looking to
buy ... but we see a bit more selling from the wholesale side,"
said Brian Lan, managing director at dealer GoldSilver Central.
(Reporting by Eileen Soreng, Brijesh Patel, and Ashitha
Shivaprasad in Bengaluru, Rajendra Jhadav in Mumbai; Editing by