Gold importers in India rushed to stock up materials ahead of key festivals after prices of the precious metal dropped to the lowest level in nearly a month, while buying in the rest of Asia was sluggish.
India's benchmark gold on the Multi Commodity Exchange fell as low as 30,812 rupees per 10 grams, thanks to the rupee hitting a two-week high against the dollar, traders said.
India, the world's top gold consumer, is approaching the height of its festival season, which peaks with the Diwali and Dhanteras festivals later this month. Gold is a key part of gifts and is used for dowries at weddings, which are popular at this time of year.
"We are hoping for good Diwali sales," said Lokesh Kumar Agarwal, chairman of Brijwasi Bullion and Jewellers in Lucknow.
But traders said Indian buying is very price sensitive and could easily dry up if prices rebound.
Spot gold traded around $1,710 an ounce on Friday, off its October high near $1,800, as the excitement after the U.S. Federal Reserve's latest round of quantitative easing faded.
Graphic: Gold prices in different currencies http://link.reuters.com/kuk73t
In Singapore and Hong Kong, dealers reported light buying as range-bound prices failed to excite either buyers or sellers.
"We see some light buying when prices approach $1,700, but overall demand is sluggish as people are still worried about the global economy," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong.
Premiums on gold bars in Hong Kong were cited in the range of 50 cents to $1 an ounce above London prices. In Singapore, premiums stood at 80 cents, dealers said.
India's gold demand will remain in focus as the country's festival season peaks in mid-November.
Market participants are also anxiously awaiting the U.S. presidential election and its impact on monetary policy, which has been a key driver of gold prices this year.