* Gold in India trades at premium for first time in 5 weeks
* Premiums in China at $6-$8/oz
* Spot gold rates headed for weekly drop
By Nithin ThomasPrasad and Rajendra Jadhav
BENGALURU/MUMBAI, Feb 2 (Reuters) - Demand for physical gold improved this week in India as jewellers resumed purchases after the government kept import taxes on the precious metal unchanged, while buying remained subdued in most other centres in Asia.
Jewellers in India had delayed purchases earlier this week and offered gold at a discount anticipating a reduction in the tax in the country’s annual budget on Thursday.
“As the budget is over, they have to make purchases for next week’s jewellery exhibition,” said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.
The Gem & Jewellery Export Promotion Council’s exhibition, where jewellers display their designs to buyers, kicks off in Mumbai next week.
Improved demand from jewellers, prompted jewellers to charge a premium, for the first time in five weeks, of up to $2 an ounce on Friday over official domestic prices. This compared with a discount of $3 last week.
The domestic price includes a 10 percent import tax.
Local gold prices jumped to 30,720 rupees per 10 grams on Friday, the highest level since Nov. 9, 2016.
“For last few months investment demand was weak as gold was giving negative returns and rupee was appreciating,” said a Mumbai-based dealer with a private bank.
“But now, the rupee has started depreciating due to fiscal deficit concerns. It could attract investors towards gold.”
Meanwhile, in top consumer China, demand remained muted ahead of the Chinese New Year, which kicks off on Feb. 16.
Chinese premiums ranged between $6 and $8 an ounce versus $7 last week, while in Hong Kong, premiums of 60 cents-$1 were being charged, as against 60 cents-$1.20 previously.
“Physical demand in China should slow from now until the Chinese new year ... but after that, the physical market is expected to firm,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
High prices were also a deterrent for demand.
“I think when prices come down to $1,320 or $1,330 an ounce, we might see some buying there,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Benchmark spot gold fell 0.3 percent to $1,345.22 per ounce at 1030 GMT and was down 0.4 percent for the week so far.
In Singapore, premiums remained unchanged this week at 60-80 cents amid steady demand.
“We do see good demand (in the region) this week as we approach the Chinese New Year. I think the slight (price) pullback could see some clients come and pick up physical gold,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
In Japan, gold continued to be sold at a 50 cent discount, the same as last week amid weak demand, a Tokyo-based trader said. (Reporting by Nithin Prasad and Arpan Varghese in Bengaluru, Rajendra Jadhav in Mumbai, editing by David Evans)