May 3 (Reuters) - Physical gold demand in India remained subdued this week despite a slight correction in prices as buyers awaited an even bigger drop, while Chinese premiums slipped for the second straight week due to sluggish holiday demand.
In India, the world's second-largest gold consumer and a major importer, domestic prices fell to around 70,500 rupees per 10 grams this week, after hitting a record high of 73,958 rupees last month.
"Though prices are coming down, demand is not improving. Buyers have taken a pause. They think prices could fall sharply, considering the big price rally of the last two months," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.
Indian dealers charged a premium of up to $1 an ounce over official domestic prices - inclusive of 15% import and 3% sales levies, versus last week's premium of $5.
Akshaya Tritiya, the second-biggest gold-buying festival after Dhanteras, will be celebrated next week in India. "If prices remain at this level or correct further, we could see good demand during the festival,” said a Mumbai-based bullion dealer with a private bank.
In China, dealers charged premiums of $18-$20 per ounce over benchmark prices , down from the $20-$35 premiums seen last week.
Chinese markets are closed for the Labour Day holiday from May 1-3, but there was no boost from pre-holiday spending and consumption volume declined due to a short trading week, said Bernard Sin, regional director, Greater China, at MKS PAMP.
In Singapore, bullion was sold at anywhere between at par to $2 premiums , while dealers charged at par to $2.25 premiums in Hong Kong.
In Japan, dealers sold gold at $0.5-$0.75 premiums, slightly lower than the last week's range.
Despite a weaker yen and high gold prices, Japanese traders noted a reasonable number of customers buying gold during the April 29-May 5 Golden Week holiday season.
($1 = 83.4682 Indian rupees)
Reporting by Ashitha Shivaprasad and Harshit Verma in Bengaluru, Rajendra Jadhav in Mumbai; Editing by Vijay Kishore
