* India sees record price levels for April
* Gold offered at discount in India despite festival
By Rajendra Jadhav and Eileen Soreng
MUMBAI/BENGALURU, April 18 (Reuters) - Demand for physical gold was lower-than-usual during a key festival in the world’s second biggest consumer India as local prices peaked and a cash crunch curbed retail spending.
On Wednesday, Indians celebrated the annual festival of Akshaya Tritiya, when buying gold is considered auspicious.
“Consumers want to make purchases for Akshaya Tritiya, but they are not comfortable with the current price. They are making smaller purchases,” said Chanda Venkatesh, managing director of CapsGold, a bullion merchant based in the southern city of Hyderabad.
In the local market, gold prices were nearly 10 percent higher during the current festival period compared with last year, with prices trading around 31,573 rupees per 10 grams, the highest level since August 2016.
This is also the highest price levels seen on record for the month of April compared with the previous corresponding periods.
Usually the market trades in a premium on Akshay Trititya day, but a Mumbai-based dealer with a global trading firm said it was surprising to see it either at a discount or at par.
Dealers in India were offering a discount of up to $1 an ounce on official domestic prices this week, down from $2 last week. The domestic price includes a 10 percent import tax.
A cash-crunch was also hurting retail demand in many parts of the country, said Nitin Khandelwal, chairman at All India Gems & Jewellery Trade Federation (GJF).
In the last few weeks, banks’ automated teller machines (ATMs) had run out of notes in different parts of the country.
Bankers and operators of automated teller machines say the sudden shortage of cash in some Indian states is mainly the result of the central bank printing fewer 2,000 rupee notes over the past few months in favour of harder-to-hoard smaller bills.
Meanwhile, demand across major centres in Asia remained sluggish as benchmark prices hovered close to a two-and-half month high.
Spot gold was 0.4 percent higher at $1,352.22 an ounce at 1250 GMT on Wednesday, having hit an 11-week high at $1,365.23 last week.
Premiums charged in top consumer China were about $5 to $7 an ounce, little changed from last week.
“The demand is not too much ... and will slow down from here,” Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong said, adding that some buying interest could come in around the $1,310-$1,320 level.
Hong Kong premiums edged up to 50 cents to $1.20 this week, versus the 50-60 cent range last week.
Premiums in Singapore were also little changed from last week and ranged between 70 cents to a dollar.
Demand across South-east Asia has been slow, a Singapore-based dealer said.
For the third straight week, gold was being sold at par with the global benchmark in Japan.
($1 = 65.6600 Indian rupees)
Reporting by Rajendra Jadhav in Mumbai and Eileen Soreng in Bengaluru, additional reporting by Apeksha Nair; editing by David Evans