By Rajendra Jadhav and Eileen Soreng

(Reuters) - Discounts on physical gold in India narrowed this week, helped by some fresh buying from jewellers, while COVID-19 restrictions kept activity tepid in top consumer China.

Indian dealers offered discounts of around $6 an ounce over official domestic prices — inclusive of 10.75% import and 3% sales levies — compared with last week's $10 discounts.

Demand from jewellers has improved but retail buying is still weak, said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Demand from weddings has been faltering as the season is coming to an end, the dealer said.

Jewellers were expecting a big drop in prices, "but prices did not fall much and recovered quickly. Jewellers have now started making purchases," said a Mumbai-based dealer with a private bullion importing bank.

In China, gold changed hands at anywhere between discounts of $5 and $0.5 to premiums of $2 to $5 an ounce over global benchmark spot prices. [GOL/]

"Although we have not seen any signs of huge import into China, we believe current lockdown in several major cities deterred unessential movement. Some fabricators may face bankruptcy due to high overhead cost against zero income," said Bernard Sin, regional director for Greater China at MKS.

But demand could pick up in August once the market starts to operate normally, Sin added.

While the Shanghai hub is still wobbling back from a two-month long COVID-induced lockdown, authorities grappled with fresh outbreaks in Beijing this week.

In Hong Kong, gold was sold at anywhere between a discount of $1.8 an ounce to a premium of$1.50, while in Singapore, dealers charged premiums of $1.30-$1.70.

A dip in prices did trigger some buying "but it is nothing much to really shout about," said Brian Lan, managing director at Singapore dealer GoldSilver Central. He added that interest in silver had picked up.

The Japanese market saw discounts of $0.5 to $0.50 an ounce premiums, Tokyo-based traders said.

(Reporting by Eileen Soreng, Bharat Govind Gautam in Bengaluru, Rajendra Jhadav in Mumbai; editing by Arpan Varghese and Aditya Soni)