Jewellers are running business with thin inventories and have to build stocks for the festive season.

Demand for physical bullion was subdued in major Asian hubs this week as high prices dampened consumer interest, although some hefty discounts on offer in India led to a slight uptick in buying ahead of a major festival season.

Gold futures in India, the biggest bullion consumer after China, were trading around Rs 38,504 per 10 grams on Friday, easing from a record high Rs 39,885 touched on Wednesday.

"Demand has been slowly improving," said Daman Prakash Rathod, a director at MNC Bullion, a wholesaler in Chennai.

"But we need a bigger fall for normal demand during the festive season."

However, dealers offered discounts of up to $45 an ounce over official domestic prices this week, the biggest since August 2016, as jewellers held off on fresh purchases.

Last week, discounts of up to $24 were offered. The domestic price includes a 12.5 per cent import tax and 3 per cent sales tax.

"Jewellers are not making purchases anticipating a bigger fall," said a Mumbai-based dealer at a private bullion-importing bank.

Jewellers are running business with thin inventories and have to build stocks for the festive season, the dealer said.

Demand in India usually strengthens in the final quarter of the year due to the wedding season as well as festivals such as Diwali and Dussehra, when buying gold is considered auspicious.

India's August gold imports plunged 73 per cent from a year ago due to a price rally and a hike in import duty, a government source said on Wednesday.

Global benchmark spot gold prices were set to mark a weekly decline, but still held above $1,500, having hit $1,557 earlier in the week, the most expensive since April 2013.

In top gold buyer China, bullion was sold at a premium of $9-$10 an ounce over the benchmark, unchanged from last week.

While buying did pick up slightly, it's mostly coming from the investment side while jewellery demand is weak, said Samson Li, a Hong Kong-based precious metals analyst with Refinitiv GFMS.

Hong Kong premiums were little changed at $0.50-$1.15 from last week's $0.60-$1.10 range.

Though signs of easing political tensions in Hong Kong boosted sentiment in wider markets, impacts are yet to be seen in terms of activity in the bullion market, traders said.

In Singapore, premiums were quoted in the $0.50-$0.60 an ounce range versus last week's $0.60-$0.80.

"We've seen substantially more interest in silver versus gold this week," said Vincent Tie, sales manager at Silver Bullion.

Global spot silver prices have risen about 27 per cent since the end of May.

In Japan, gold was sold at an about $0.75 discount, a Tokyo-based trader said.

Japanese retail gold prices, meanwhile, hit their highest since 1980.