Asia Gold-China sees brisk festive purchases; Indian demand tame

* Lunar New Year fails to revive demand in Hong Kong

* India discounts widen to $11/oz

* Indian buyers delay purchases on hopes of further price falls

* Benchmark spot gold set to post its first weekly decline in six

BENGALURU/MUMBAI, Jan 17 (Reuters) - Physical gold purchases gathered steam ahead of the Lunar New Year celebrations in China and Singapore, while demand in India dwindled this week, encouraging retailers to offer more discounts.

The Chinese Lunar New Year falls during the last week of January and gold demand is usually boosted during the period.

“Demand has been increasing - but I think it is more about seasonal demand picking up rather than a change in a trend,” said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS. “Demand should start to dry up after the New Year.”

Premiums of $5-$6 an ounce over the benchmark price were charged in top-consumer China, compared with $7-$7.50 last week. In Singapore markets, premiums rose to $0.60-$0.80 an ounce versus $0.50-$0.60 last week.

“We’re seeing the usual buying for the upcoming Chinese New Year ... Compared to last year, retail buying is 10-15% better for this period,” said Brian Lan, managing director at Singapore dealer GoldSilver.

Demand was fragile in India, the world’s second largest gold consumer, where dealers were offering a discount of up to $11 an ounce over official domestic prices, compared with a discount of $7 last week.

The domestic price includes a 12.5% import tax and 3% sales tax. Gold futures were trading around 39,770 rupees per 10 grams on Friday, after hitting a record high of 41,293 rupees earlier this month.

Buyers have been postponing purchases, expecting prices will correct further, said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji. “Wedding season demand is not picking up due to volatile prices.”

Weddings are one of the biggest drivers of gold purchases in India.

“Jewellers have made decent amount (of) purchases in the last few weeks. They are now waiting for an improvement in retail demand,” said a Mumbai-based dealer with a private bullion importing bank.

In Hong Kong, premiums of $0.40-$0.60 an ounce were charged, as against last week’s $0.30-$0.40.

“Hong Kong is all quiet, not much going ahead of Chinese New Year and tourists are not coming and bringing demand for gold for the retail industries,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers.

Gold in Japan was sold at a premium of about $0.50 an ounce over benchmark prices.

International spot gold prices are on course to post their first weekly decline in six as a preliminary U.S.-China trade deal improved risk appetite. (Reporting by Sumita Layek, Asha Sistla in Bengaluru and Rajendra Jadhav in Mumbai; editing by David Evans)