Asia Gold-India swings to discount as pandemic stalls demand

* Jewellery stores witnessing negligible footfalls- Mumbai dealer

* India offers discounts of $2/oz versus $2 premium last week

* Demand up 30% vs last week on price volatility -Singapore dealer

By Rajendra Jadhav and Sumita Layek

April 30 (Reuters) - Physical gold in India was sold at a discount this week for the first time in 2021 as a spike in coronavirus cases prompted strict restrictions and kept buyers away.

Several Indian states have run out of coronavirus vaccines as new infections surged to another daily record.

"Almost every state government has put some kind of COVID-19 restrictions... jewellery stores are either closed or witnessing negligible footfalls," said a Mumbai-based dealer with a bullion importing bank.

Dealers were offering a discount of up to $2 an ounce this week over official domestic prices, inclusive of 10.75% import and 3% sales levies, from last week's premium of $2.

"Jewellers have nearly stopped buying. They don't know when retail demand will pick-up," said a bullion dealer based at Bangalore in the southern state of Karnataka.

India's gold consumption is expected to falter in the June quarter due to the lockdowns, the World Gold Council said on Thursday.

In top consumer China, premiums of $8-$10 were charged over benchmark spot gold prices, unchanged from last week.

"We are seeing good volume exchange hands ahead of super long weekend in China," said Bernard Sin, regional director, Greater China at MKS Switzerland.

"As long as interest rates remain low, we will continue to see investment interest shifting into gold."

China will celebrate Labour Day holiday from May 1-5.

In Singapore, premiums widened to $1.5-$2.0 from $1.6-$1.8 previously.

"We actually have seen a lot more demand, probably 30% higher than last week" due to the volatility in gold prices, said Brian Lan, managing director at dealer GoldSilver Central.

In Hong Kong, premiums of $0.8-$1.8 an ounce were charged versus $1.2-$1.8 last week.

In Japan, gold was sold at flat to premiums of $0.50 amid Golden week holidays and new COVID-19 emergencies in some regions. (Reporting by Sumita Layek and Shreyansi Singh in Bengaluru, Rajendra Jadhav in Mumbai; Editing by Shailesh Kuber)