By Rajendra Jadhav and Arpan Varghese
MUMBAI/BENGALURU (Reuters) - Physical gold demand remained soft across Asia this week despite a downwards price correction as consumers awaited further dips in rates, while a government move to bring transparency to bullion trading kept buyers on the sidelines in India.
India brought the bullion industry under the Prevention of Money-Laundering Act (PMLA) in August, making it mandatory for jewellers to keep records of customers' personal identification number or tax code for transactions above 50,000 rupees ($772).
"Customers aren't comfortable giving all details required under the PMLA. They're afraid that if they do so, government agencies might chase them in future for tax-related matters," said Kumar Jain, vice president, Mumbai Jewellers Association.
Indian dealers were offering discounts of up to $4 an ounce this week, unchanged from last week.
Local prices have corrected down 2.5 percent from a 10-month peak of 30,474 rupees per 10 grams hit on Sept. 8.
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Demand usually strengthens in the final quarter as India, the world's second-biggest consumer, gears up for the wedding season as well as festivals such as Diwali and Dussehra.
"Jewellers are sceptical about festive demand. They are keeping bare-minimum inventory," said a Mumbai-based dealer with a private bank.
In top consumer China, gold was being sold at premiums of $4 to $5 over the benchmark, compared with the $3 to $5 range last week. In Hong Kong, premiums were unchanged in the 40 cents to $1 range.
"While selling eased, buying hasn't been aggressive," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Benchmark spot gold rebounded to about $1,296 an ounce on Friday from a four-week low of $1,287.61 hit the previous day on fresh tensions over North Korea. But, the metal was still headed for a weekly decline of nearly 2 percent amid prospects of another interest rate hike in the United States this year.
Geopolitical risks typically boost demand for safe-haven investments, such as gold.
"We saw heavy selling mid-September but that has eased now and demand remains subdued. Demand is unlikely to pick up unless prices fall below $1,280," said Cameron Alexander, an analyst with Thomson Reuters-owned metals consultancy GFMS.
In Singapore, premiums of about 80 cents were quoted, versus 60 to 80 cents last week.
Discounts narrowed to about 50 cents in Japan, from last week's $1 range.
"We saw quite a bit of safe-haven purchases in Japan immediately after the first (North) Korean missile sailed over northern parts of the country, but that has now dissipated," Alexander said.
($1 = 64.7925 rupees)
(Rajendra Jadhav in MUMBAI and by Arpan Varghese in BENGALURU; Additional reporting by Apeksha Nair in BENGALURU; Editing by Tom Hogue)