* Dealers in India offer discounts of up to $6/oz
* Chinese markets open after week-long holiday
* Incentives expected to boost Bangladesh jewellery exports
By Rajendra Jadhav and Sumita Layek
MUMBAI/BENGALURU, Oct 12 (Reuters) - Physical gold demand in India was subdued this week as a rally in domestic prices curbed retail purchases going into a key festival season, while buying remained lacklustre in other major Asian hubs.
In the Indian market, gold futures this week touched their highest since July 2016 at 32,014 rupees per 10 grams.
“Usually retail buying rises during Navratri (Dussehra) but the price rise is dampening demand,” said Chanda Venkatesh, managing director of CapsGold, a bullion merchant based in the southern city of Hyderabad.
Dealers in India offered a discount of up to $6 an ounce over official domestic prices this week, down from last week’s $6.50, which was the highest since mid-June. The domestic price includes a 10 percent import tax.
“Jewellers want to make purchase for Diwali but they are waiting for a price correction,” said one Mumbai dealer with a private bullion-importing bank.
Demand usually strengthens toward the end of the year as the traditional wedding season kicks in and as the country celebrates major festivals including Diwali and Dussehra, when buying gold is considered auspicious.
India’s gold imports in September dropped more than 14 percent from a year earlier as demand was dented by a rally in local prices because of a depreciating rupee, according to provisional data from precious metals consultant GFMS.
Neighbouring Bangladesh, which approved its first gold trade policy last week, should register a boost in exports of ornaments because the policy proposes several incentives for increasing jewellery exports, including tax benefits, said Cabinet Secretary Shafiul Alam.
Meanwhile, global benchmark spot gold prices were on track to register their best week in seven as tumbling global stock markets sent investors rushing to the safe-haven asset.
In China, markets opened after the Golden Week festival and premiums ranged between $4.50 and $8 an ounce, versus $6.50-$8 in the week ending Sept. 28.
Premiums in Hong Kong rose to $1-$1.50 from between 70 cents and $1.30 last week.
“This week there was some fresh buying interest around the $1,185-$1,190 level. But with prices now up $30 dollars, the physical market may be quiet for a while,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
In Singapore, there was limited safe-haven buying, said Ronan Manly, precious metals analyst at Singapore-based dealer BullionStar.
Premiums of 80 cents to $1.20 were charged in Singapore, little changed from between 80 cents and $1.30 previously.
“We will see buying during the upcoming Diwali festival, as there is an Indian community in Singapore,” said Brian Lan, managing director at Singapore dealer GoldSilver Central.
In Japan, prices were on a par with the global benchmark, a Tokyo-based trader said.
Reporting by Sumita Layek and Vijaykumar Vedala in Bengaluru, Ruma Paul in Dhaka and Rajendra Jadhav in Mumbai; Editing by Arpan Varghese and David Goodman