Physical gold demand in India improved this week as domestic prices dropped ahead of a festival over the weekend, while purchases in top consumer China were limited by COVID-19 lockdowns.

The Gudi Padwa festival, also known as Ugadi in some parts of the country, will be celebrated on Saturday. Buying gold during festivals is considered auspicious in the world’s second-biggest market.

“We expect retail demand for gold to remain healthy in this festive season, though price spikes and volatility driven by geo-political events tend to act as headwinds,” said Somasundaram PR, regional chief executive officer of WGC’s Indian operations.

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Local gold prices fell to their lowest level since Feb. 25 earlier this week.

There was a slight improvement in demand from jewellers but gold was still trading at a hefty discount, said Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai.

Dealers were offering a discount of up to $35 an ounce on official domestic prices — inclusive of the 10.75% import and 3% sales levies, down from the last week’s discount of $53.

In China, gold discounts widened to $2-$6 an ounce on global benchmark spot rates compared with $5 in the previous week. Dealers said buying had likely slowed owing to sustained lockdowns due to coronavirus outbreaks in key regions.

In Hong Kong, gold was sold between a discount of $3 an ounce to at par with spot prices, while Singapore saw premiums of about $1 to $1.80 an ounce.“Manufacturers will still need to continue to do business, they need to manufacture. So they will have to buy and they have to adjust to the new normal in higher spot prices,” said Brian Lan, managing director at dealer GoldSilver Central.

In Tokyo, gold continued to be sold at a discount of 50 cents to a premium of 50 cents.