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Physical gold flipped to premiums in India this week for the first time in nearly three months, as retreating domestic prices along with the central bank’s move to withdraw the country’s highest value currency notes boosted buying.

Indian dealers were charging a premium of up to $3 an ounce over official domestic prices — inclusive of the 15% import and 3% sales levies, up from last week’s discount of $5.

Local gold prices this week fell to 59,363 rupees ($718.92) per 10 grams, their lowest level since April 3, which boosted retail demand, a New Delhi-based bullion dealer said.

Moreover, “demand was good this week as some consumers were trying to use 2,000-rupee notes to buy gold,” said a Mumbai-based dealer with a private bullion importing bank.

The Reserve Bank of India said last week that notes of 2,000 rupees denomination will be withdrawn from circulation and citizens have until September-end to exchange or deposit them.

Asia gold: Price dip draws some interest in India; demand bleak elsewhere

In top bullion consumer China, gold changed hands between premiums of $2 and $6.50 to global prices, which were set for a third straight weekly drop.

“Dealers are in slightly cautious mode waiting for firmer direction… After a significant move across CNH and CNY pairs this week, it is probably not unexpected to see uncertain physical demand,” said Bernard Sin, regional director, Greater China at MKS PAMP.

China’s yuan rebounded from a near six-month low against the dollar, as some major state-owned banks sold the U.S. currency to prevent the yuan from sinking further.

But independent analyst Ross Norman said demand remained firm for high-end jewellery in the country.

In Hong Kong, Peter Fung, head of dealing at Wing Fung Precious Metals, noted fresh demand for jewellery from Chinese travellers which prompted dealers to charge $0.50-$2 premiums.

Premiums in Singapore ranged between $0.50-$2, while gold was sold at par with global rates to a $0.50 premium in Japan.

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