Gold premiums in India fell this week, as a recovery in prices tempered a buying frenzy led by the government’s decision to ease import tax, while dwindling consumer sentiment weighed on demand in top consumer China.

Indian dealers charged a premium of up to $7 an ounce over official domestic prices – inclusive of 6% import and 3% sales levies. Last week, they were charging a premium of up to $20 an ounce, their highest level since 2014.

“Last week, there was a mad rush to buy gold as prices dropped sharply due to the reduction in import tax. However, as prices recovered this week, buyers once again went to the sidelines,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Domestic prices in the world’s second-largest gold consumer and a major importer were hovering around 70,100 rupees per 10 grams on Friday, after hitting a four-month low of 67,400 rupees earlier this week.

In China, dealers were offering a $2 discount to $8 premium an ounce on international spot prices, compared with $10 discount to $2 premium offered last week.

Asia gold: India flips to premium after import duty reduction spurs demand

“The broader economic slowdown, as evidenced by July’s manufacturing contraction, is dampening investor sentiment,” said Bernard Sin, regional director of Greater China at MKS PAMP.

“Traditional summer seasonality factors combined with weak consumer demand for gold jewellery have exacerbated the situation.”

In Singapore, gold was sold at a $1.25 discount to a $1.25 premium per ounce, while in Hong Kong, it was sold between a $1 discount to a $1.20 premium.

Dealers in Japan sold gold at a $3.0 discount to a premium of $0.25. After the interest rate hike by the Bank of Japan, the price of gold in yen fell sharply, Tokyo-based traders said.