The fall in bullion prices also stirred buying in top consumer China, pushing down discounts to around $5 per ounce versus global benchmark spot rates, from $12-$16 earlier this week, dealers said.
Jewellers and bullion dealers in India were making small purchases on Thursday after prices corrected sharply, said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in Kolkata.
"Retail demand is slowly improving but unlikely to go back to normal level anytime soon," he said.
Local gold futures fell to 46,744 rupees on Thursday, a trough since May 5. Discounts were unchanged at about $12 an ounce, the highest since mid-September 2020, on official domestic prices -- inclusive of 10.75% import and 3% sales levies.
Jewellery stores have opened in most parts of the country but they are witnessing lower footfalls, said a Mumbai-based bullion dealer with a gold importing bank.
"The industry is sceptical on how quickly demand would recover to normal level. Many believe it may not before festivals in August," the dealer said.
In Singapore, premiums remained at $1.20. Demand for gold bars and coins for investment remains strong as inflation concerns continue to worry investors, said Zvika Rotbart, South East Asia business development executive at J. Rotbart & Co.
Relatively lower premiums over the last month or so, are leading to "margin compression" from a dealer standpoint, said David Mitchell, the managing director at Indigo Precious Metals.
Demand is still tempered "as the local markets simply do not understand the global macro-economic storm that's heading towards us and already here," Mitchell added.
Japanese customers, meanwhile, await further dips to step up purchases, a Tokyo-based trader said, quoting $0.50 per ounce premiums.
(Reporting by Arundhati Sarkar and Brijesh Patel in Bengaluru; Editing by Arpan Varghese and Amy Caren Daniel)
By Rajendra Jadhav and Swati Verma
