BENGALURU/MUMBAI (Reuters) – Physical gold demand was healthy this week in India in the run up to a key festival and with the wedding season underway, while other top Asian hubs saw steady interest in bullion as global prices recovered from a 2019 low touched earlier this week.

Gold is an essential part of weddings in India and is a popular gift during festivals.

“Retail demand is good due to weddings. Even after a recent price rise, buyers are making purchases,” said Chanda Venkatesh, managing director of CapsGold, a bullion merchant based in the southern city of Hyderabad.

In India, dealers charged a premium of up to $2 an ounce over official domestic prices, down from last week’s premium of $2.50, the highest in nearly five months. The domestic price includes a 10 percent import tax and 3 percent sales tax.

“Supplies are limited in the market. Smuggling has come down significantly in last few weeks,” said a Mumbai-based bullion dealer with a gold importing bank.

Jewellers were making purchases for the Akshaya Tritiya festival on May 7, the dealer added.

India’s gold smugglers have slowed their operations over worries their shipments will be caught up in seizures of cash, bullion, booze and drugs aimed at controlling vote-buying in the country’s national elections.

In top bullion consumer China, premiums eased to $14-$18 an ounce over the benchmark, from a two-year high of $20, a level last seen in March 2017, last week and the start of this week.

Benchmark spot gold on Tuesday dropped to its lowest since end-December, but has since recovered more than one percent to hit its highest in more than a week at $1,282.98 on Friday.

“Recent increases in the Shanghai gold premium signals that the Chinese are using lower prices as a buying opportunity,” Goldman Sachs said in a note on Thursday.

Some analysts also attributed the recent surge in China’s gold premiums to a reduced supply of the metal.

The comparatively lower prices this week supported demand in other Asian centres as well, with premiums in Singapore rising to about $1 an ounce from last week’s 60-70 cents range.

“We did see more sales with the correction of prices. Speaking with customers, many see prices under $1,300 as a buying opportunity,” said Gregor Gregersen, CEO of Singapore retailer Silver Bullion Pte Ltd.

Purchases in Japan peaked earlier this week before local gold prices bounced back from nearly three-month lows, a Tokyo-based trader said.

Demand is now expected to fall further as the country’s 10-day Golden Week holiday starts this weekend.

In Hong Kong, premiums were mostly unchanged at 60 cents-$1.20.

(Graphic: India’s gold market: tmsnrt.rs/2b1Tl6J)