Demand for physical gold was much lower than usual during a key festival in India, the world’s second-biggest consumer, as near-record high prices deterred retail buyers and forced dealers to offer steep discounts.

Akshaya Tritiya, the second-biggest gold-buying festival after Dhanteras, was celebrated on Friday.

“Many consumers opted for token purchases of small denomination coins. Jewellery demand was very weak compared to last year,” said a Mumbai-based jeweller, who said his sales during the festival amounted to only about two-thirds of the numbers seen last year.

“We were not expecting demand to rise or match last year’s level. But the drop in demand was far bigger than our expectations.”

Domestic prices were trading around 72,700 rupees per 10 grams on Friday, not far from a record high of 73,958 rupees hit last month.

Prices have risen more than 21% since the last Akshaya Tritiya festival.

“Retail buyers are struggling to swallow the recent price increases, which have badly affected their purchasing power,” said Prithviraj Kothari, president of the India Bullion and Jewellers Association.

Asia gold: Safe-haven buying props up China demand; activity still muted in India

Indian dealers offered discounts of up to $7 an ounce over official domestic prices - inclusive of 15% import and 3% sales levies - versus last week’s $1 premium.

In top consumer China, dealers charged premiums of $26-$35 per ounce over benchmark spot prices, up from $18-$20 last week.

“Demand is slightly muted as prices are quite high. If they fall to $2,250, people will buy on dips,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

In Japan, dealers sold gold at $0.5-$1 premiums. Traders said demand picked up slightly after the Golden Week holiday.

In Singapore, and Hong Kong, gold was sold at anywhere between at par with the benchmark to $2.50 premiums.