* India premiums unchanged, buying steady ahead of festival
* Singapore premiums rise to 60-70 cents from 20-50 earlier
* Weaker yen dents gold buying in Japan
* India's gold market: tmsnrt.rs/2b1Tl6J
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
BENGALURU/MUMBAI, April 18 (Reuters) - Gold premiums in top consumer China jumped to their highest in more than two years, as a drop in global prices and strengthening yuan encouraged purchases amid optimism about the state of the economy.
Chinese premiums climbed to about $20 an ounce over global benchmark prices this week, a level last seen in March 2017. Premiums of about $13-$15 were charged last week.
“Lower prices are giving way to a rise in buying,” said Alfonso Esparza, senior market analyst at OANDA.
“Physical demand has been climbing as central banks have stepped up their efforts, leaving investors to follow their lead.”
Data earlier this month showed China raised its gold reserves for a fourth straight month during end-March. Some central banks often use bullion to diversify their reserves away from the U.S. dollar.
Benchmark spot gold slid to its lowest since end-December this week as recent positive economic data and optimism a long-drawn trade fight between United States and China would end soon allayed concerns about a global slowdown.
Along with the weaker spot gold price, strength in the Chinese currency has also lifted premiums to multi-year highs, said an analyst based in Hong-Kong.
China’s yuan rose to one-month peak against the U.S. unit on Wednesday, making the dollar-denominated bullion cheaper for investors in mainland China.
In India, demand was steady as lower domestic prices prompted buyers to make purchases for weddings and an upcoming festival. Indian gold futures were trading near their lowest level in three months.
Dealers were charging a premium of up to $2.5 an ounce, over official domestic prices, the highest in nearly five months, unchanged from last week. The domestic price includes a 10 percent import tax and 3 percent sales tax.
“At current price levels, demand is very good from retail buyers,” said Mukesh Kothari, director at Mumbai bullion dealer RiddiSiddhi Bullions.
Indians will celebrate Akshaya Tritiya on May 7, when buying gold is considered auspicious.
“Jewellers have been building inventory for Akshaya Tritiya. Prices are very attractive for them,” said Mumbai-based bullion dealer with a gold importing bank.
The country’s gold imports in March rose nearly a third from a year to $3.27 billion.
In Singapore, a correction in prices boosted gold demand, with premiums rising to 60-70 cents an ounce over the benchmark versus 20-50 cents previously.
Premiums in Hong-Kong remained steady at the 50 cents-$1.20 level as investors stayed on the sidelines ahead of the Good Friday and Easter holidays.
Japanese prices were flat as a weaker yen impeded gold buying despite a drop in prices, a Tokyo-based trader said.
Reporting by Swati Verma and K. Sathya Narayanan in Bengaluru and Rajendra Jadhav in Mumbai; editing by Arpan Varghese and David Evans
Our Standards: The Thomson Reuters Trust Principles.