This week, Indian gold dealers provided the largest discounts in eight and a half months as COVID-19-related limitations restricted consumption, while top consumer China shifted to a discount for the first time since late January.

The official number of coronavirus infections in India has surpassed 28 million, with more than 2,500 fatalities every day.

“Bullion merchants provided substantial discounts because prices are correcting internationally and demand is poor in the domestic market,” said a Mumbai-based bullion dealer with a gold-importing bank.

Dealers offered discounts of much to $12 per ounce above official domestic pricing - inclusive of 10.75% import and 3% sales tax - most since mid-September 2020, compared to $10 discounts last week.

“Jewelers were only inquiring since several state governments want to relax lockup rules. However, they were not taking orders,” said another Mumbai-based bullion trader who works for a gold-importing bank.

According to brokers, a combination of rising COVID-19 cases and recent rules has forced Chinese gold prices to a discount of up to $20-$50 per ounce above international market prices, down from premiums of $6-$7 earlier this week.

Premiums ranged from $7 to $10 last week.

On June 1, China's central bank announced a new draught anti-money laundering regulation that encompasses accountancy companies and precious metal exchanges.

This follows after a crackdown on lenders providing investment products connected to commodity futures to small-business owners.

Bernard Sin, MKS's regional director for Greater China, stated that reductions had grown to as much as $50, potentially due to newly implemented rules, and that deeper reductions may be observed in the future.

“Guangzhou has experienced an increase in COVID-19 incidents, resulting in a massive lockdown impacting all gold manufacturers,” Sin explained.

Singapore premiums were stable at $1.2-$1.7.

According to Brian Lan, managing director of dealer GoldSilver Central, higher prices at the start of the week prompted greater selling from jewelers, pawnbrokers, and merchants, however, demand has subsequently rebounded.

Gold recovered from a two-week low touched on Friday as a boost in US nonfarm payrolls came up short of forecasts, but the metal was still on track for its largest weekly drop since March.

Spot gold was up 0.9% to $1,886.80 per ounce at 9:43 a.m., after hitting a low of $1,855.59 earlier in the day. So far this week, it is down 0.8%.

Gold futures in the US increased 0.9% to $1,890.80.

“We're seeing such a tiny rise in the aftermath of the tiny miss on non-farm payrolls upwards of a few market observers were expecting a substantially higher figure, but when that didn't happen, gold market bulls sighed,” said Kitco Metals senior analyst Jim Wyckoff.

“Today's rally in the gold market keeps the uptrend on the daily chart alive, which is promising for bulls.”

The dollar index fell off a three-week high, making gold more inexpensive for holders of foreign currencies, while benchmark 10-year rates fell as well.

“Part of what we've seen in terms of gold strength is inflation expectations, which are partially based on improved economic statistics, like better job growth, broader recovery in the US, portions of Europe, and China has been doing excellently,” said Jeffrey Christian, managing partner of CPM Group.

“Gold prices are likely to remain between $1,855 to $1,920 per ounce.”

Gold is frequently seen as a hedge against inflation.

Silver rose 1% to $27.71 per ounce, putting it on course for its worst weekly drop since late March.

Separately, copper prices rose on Friday as speculators grabbed up material at cheaper prices following significant losses the earlier day on expectations that good US economic data might prompt tighter monetary policy.

By 1400 GMT, three-month copper mostly on London Metal Exchange (LME) had gained 1.8% to $9,960 a tonne, after falling as much as 3.8% the previous day.

Copper reached a record high of $10,747.50 a pound last month, fueled by optimism about global economic rebound and fresh demand from a projected green revolution, along with a transition to electric vehicles.

“It's booming today because people are looking for bargains. “The overall outlook for industrial metals and commodities, in general, remains bullish,” said Julius Baer analyst Carsten Menke in Zurich.

“The fundamentals for industrial metals are solid, but assumptions about where prices must be centered on the fundamental background have already been exaggerated.”

In China, the most-traded July copper contract on the Shanghai Futures Exchange plummeted as much as 3.6% to 70,470 yuan ($11,001) a ton, the lowest in six weeks.