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Asia Gold-Discounts in India widen, China's COVID curbs keep demand muted

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* India sees discount of up to $5/oz vs $2 discount last week

* Singapore premiums at $1.20-$1.70 an ounce

By Rajendra Jadhav and Bharat Gautam

May 27 (Reuters) - Gold discounts widened in India this week as demand faltered due to rise in prices, while demand in top consumer China was yet to see a substantial pick-up as COVID-induced restrictions were being gradually eased.

"We lost momentum this week because of the price rise. Retail buyers are waiting for a correction," said a Mumbai-based bullion dealer with a gold importing bank.

Local gold prices were trading around 51,00 rupees per 10 grams on Friday, nearly up 3% from last week's 3-month low of 49,572 rupees.

This week, dealers were offering a discount of up to $5 an ounce over official domestic prices — inclusive of the 10.75% import and 3% sales levies, down from the last week's discount of $2.

Jewellers were making small purchases as retail demand during wedding season and Akshaya Tritiya festival was decent this month, said a Chennai based bullion dealer.

Demand in China was muted with discounts hovering around $2 per ounce, the same as last week.

Demand seems to still be slow with Shanghai in lockdown and only a couple of districts open in Beijing, said StoneX analyst Rhona O'Connell said.

Financial hub Shanghai took more gradual steps on Friday towards lifting its COVID lockdown as China soldiered on with its uneven exit from restrictions.

In Hong Kong, gold was sold at a discount of about $2, while Singapore saw premiums between $1.20 and $1.70 an ounce.

"Short-term dollar strength is battering gold and silver prices, strengthening bearish sentiments towards the metals... Oftentimes this translates to slower demand for precious metals on the retail side as well," said Vincent Tie, sales manager at Singapore dealer, Silver Bullion.

A stronger greenback makes gold more expensive for holders of other currencies.

In Japan, gold sold at anywhere between on par with the benchmark to a $0.50 premium, Tokyo-based traders said. (Reporting by Eileen Soreng, Bharat Govind Gautam in Bengaluru, Rajendra Jhadav in Mumbai; Editing by Shailesh Kuber)