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Physical gold dealers in India reduced discounts as demand picked up ahead of an expected increase in sales next week due to the festival of Akshaya Tritiya, while activity in top consumer China was muted by COVID-induced lockdowns.

In India, dealers were offering a discount of up to $8 anounce over official domestic prices — inclusive of the 10.75% import and 3% sales levies, down from last week’s $10.

Local gold prices were trading around 51,700 rupees per 10 grams on Friday, after hitting over 1-month low of 50,828 rupees earlier in the week.

However, “demand hasn’t fully recovered,” said Harshad Ajmera, a gold wholesaler in Kolkata.

Indians will celebrate the festival of Akshaya Tritiya early next week, when buying gold is considered auspicious, yet demand is likely to remain soft in the second quarter because of volatile prices, the World Gold Council (WGC) said on Thursday.

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“Jewellers are now offering a discount on jewellery making charges to increase sales during Akshaya Tritiya,” said a Mumbai based bullion dealer with a private bank.

In China, discounts hovered at $10 per ounce versus global benchmark spot rates from similar rates last week.

COVID-related lockdowns were restricting trading volumes in China and pressuring demand, said Peter Fung, head of dealing at Wing Fung Precious Metals.

In Hong Kong, gold changed hands at $3 an ounce discount to being sold at par with global rates.

Data this week showed China’s net gold imports via Hong Kong fell in March to their lowest level in 13 months as curbs against COVID-19 sapped demand, while Swiss shipments to China and India fell sharply.

Singapore saw premiums of $1.50-$1.80 an ounce.

“This week we have seen more short coverings as previously (wholesalers) were having positions that were not covered because prices were pushing higher”, said Brian Lan, managing director at dealer GoldSilver Central.

In Japan, gold sold at anywhere between on par with the benchmark to a $0.50 premium.

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