Premiums slipped to $100 an ounce over the global benchmark , from last week's $120-$130 an ounce, according to dealers.
India celebrated its second-biggest gold buying festival of Akshaya Tritiya last Friday, which along with prevailing wedding demand caused a sharp jump in premiums.
Gold is a popular gift at weddings in India, while Akshaya Tritiya is considered an auspicious day to buy gold for Hindus.
India imposed restrictions on gold imports last year to tighten its trade deficit, including a record 10 percent import duty, prompting scarce supplies and higher premiums.
But speculation that the rules could be eased after the national elections this month has grown.
"Jewellery demand is holding up to an extent but people have been putting off gold purchases on expectations that a new government will cut the duty and ease the rules," said Bachhraj Bamalwa, director with All India Gems and Jewellery Trade Federation, a grouping of more than 300,000 jewellers.
"If the rules are eased, premiums would drop sharply and consumers would rather wait for that," he said.
Bamalwa also said that Akshaya Tritiya sales were about 30 percent lower than last year as consumers were putting off big purchases.
In April 2013, gold prices fell over 10 percent in two days - the biggest such fall in 30 years. The sharp decline in prices sent consumers across Asia rushing to buy gold.
Prices, however, have been volatile since and are even lower than last year's level, making consumers more cautious.
Dealers across other parts of Asia also said demand was much lower than what they saw last year.
"It is a completely different story compared to last year," said a physical dealer in Hong Kong. "Demand is very subdued now as May and June are seasonally quite periods. Last year was unusual because of the price drop."
Earlier this week data showed that the Perth Mint's sales of gold coins and bars fell 79 percent in April from the year-earlier period, when sales hit an all-time high.
The dealer said this week's price drop below $1,300 an ounce failed to bring about aggressive buying.
Premiums in Hong Kong were between 80 cents and $1.20 an ounce, he said.
In top buyer China, premiums were about $3 an ounce, while those in Japan and Singapore were unchanged from last week's levels.