"Demand is better than last week, but it is lower than expected," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata. "We were expecting retail consumers' rush as jewellery shops were closed for a long time. We couldn't see that kind of rush." Dealers were offering a discount of up to $8 an ounce to the global spot benchmark this week, down from a discount of up to $25 last week. The discount hit a record high of $53 an ounce in late February on weak demand.

India's gold imports in March slumped 80.5 percent from a year ago to $973 million, the government said earlier this week. "Gradually discounts will taper off and we could see market at parity or at premium by Akshaya Trititya," said a Mumbai-based bullion dealer with a private bank. India will celebrate Akshaya Tritiya, the second-biggest gold-buying festival after Dhanteras, on May 9. For now, a rally in global gold prices has kept buyers away. The gold price hit a five-week high of $1,270.10 an ounce on Thursday, and was set to post a weekly gain of 1 percent. Dealers said they were seeing some investment demand for gold, though not robust purchases. ff and we could see market at parity or at premium by Akshaya Trititya," said a Mumbai-based bullion dealer with a private bank. India will celebrate Akshaya Tritiya, the second-biggest gold-buying festival after Dhanteras, on May 9. For now, a rally in global gold prices has kept buyers away. The gold price hit a five-week high of $1,270.10 an ounce on Thursday, and was set to post a weekly gain of 1 percent. Dealers said they were seeing some investment demand for gold, though not robust purchases.